Apple teams with Ant Financial, banks for interest-free iPhone financing in China

Apple Inc. has teamed up with Chinese payments giant Ant Financial Services Group and several local banks to offer interest-free financing. (File photo/AFP)
Updated 23 February 2019

Apple teams with Ant Financial, banks for interest-free iPhone financing in China

SHANGHAI: Apple Inc. has teamed up with Chinese payments giant Ant Financial Services Group and several local banks to offer interest-free financing, its first such move in the country as it looks to boost waning smartphone sales.
The US tech behemoth issued a rare revenue warning last month citing weaker iPhone sales in China, one of its most important markets, where consumer spending has taken a hit due to a slowdown in economic growth. 
On its China website, Apple is promoting the new scheme, under which customers can pay 271 yuan ($40.31) each month to purchase an iPhone XR, and 362 yuan each month for an iPhone XS. Customers trading in old models can get cheaper installments.
Users buying products worth a minimum of 4,000 yuan worth from Apple would qualify for interest-free financing that can be paid over three, six, nine, 12 or 24 months, the website shows.
The 64GB versions of iPhone’s XR and XS models sell at official sticker prices of 6,499 yuan and 8,699, respectively.
Apple is offering the plan through Huabei, a consumer credit service run by Ant Financial, the payment affiliate of e-commerce giant Alibaba, Apple’s China website shows.
Apple and Ant Financial declined to comment on the scheme.
China Construction Bank Corp, China Merchants Bank Co. Ltd, Agricultural Bank of China Ltd. and Industrial and Commercial bank of China Ltd. also offer financing schemes for Apple products, with minimum purchases of 300 yuan, Apple’s China website shows.
Apple is facing headwinds in China where economic growth slowed in 2018 to the weakest pace in 28 years, exacerbated by a crippling trade war with the United States. The US company is also battling mounting competition from Chinese handset makers.
Several Chinese electronics retailers including Alibaba-backed Suning and JD.com slashed iPhone prices recently, with discounts as steep as 20 percent.
Data from research firm IDC shows iPhone shipments to China fell 19.9 percent during the fourth quarter of 2018 versus a year earlier. Total smartphone shipments to the country were down 9.7 percent over the same period, although domestic brands such as Huawei, Oppo, and Vivo still grew market share.
Apple’s revenue for its Greater China region fell 27 percent year-on-year to $13 billion in the quarter ended December. CEO Tim Cook blamed macroeconomic conditions and currency fluctuations for Apple’s overall flagging growth.
The company has been sharpening its focus on its services business, including the App Store, mobile payments and music streaming, after the recent dip in iPhone sales that generates most of its profit.
It has teamed up with Goldman Sachs to issue credit cards that will be paired with iPhones and will help users manage their money, the Wall Street Journal reported on Thursday, citing people familiar with the matter. ($1 = 6.7227 Chinese yuan) (Reporting by Josh Horwitz; Editing by Himani Sarkar)


Tankers defer retrofits to cash in on freight rates

Updated 19 October 2019

Tankers defer retrofits to cash in on freight rates

  • The rates for chartering a supertanker from the US Gulf Coast to Singapore hit record highs of more than $17 million and a record $22 million to China earlier this week

SINGAPORE: Tankers that had been scheduled to install emissions-cutting equipment ahead of stricter pollution standards starting in 2020 have deferred their visits to the dry docks to capitalize on an unexpected surge in freight rates, three trade sources said.

US sanctions on subsidiaries of vast Chinese shipping fleet Cosco in September sparked a surge in global oil shipping rates as traders scrambled to find non-blacklisted vessels to get their oil to market.

The rates for chartering a supertanker from the US Gulf Coast to Singapore hit record highs of more than $17 million and a record $22 million to China earlier this week.

By comparison, prior to the sanctions, shipping crude from the US Gulf to China cost around $6 million-$8 million.

The extraordinary spike in freight rates proved too good to miss for some shipowners who were due to send vessels to the dry docks for lengthy retrofitting and maintenance work.

“We can confirm several owners have postponed dry docking earlier scheduled for the months of October and November to take advantage of the skyrocketing freight rates,” said Rahul Kapoor, head of maritime and trade research at IHS Markit in Singapore.

The shortage of ships to move crude oil was so acute that some shipowners also switched from carrying so-called “clean” or refined fuels like gasoline to “dirty” cargoes that include crude oil, despite the costs of having to clean them later.

“Current rate levels are a no-brainer for pushing back scrubber retrofitting,” said Kapoor.

Starting Jan. 1, 2020, the International Maritime Organization (IMO) requires the use of marine fuel with a sulfur limit of 0.5 percent, down from 3.5 percent currently, significantly inflating shippers’ fuel bills.

Only ships fitted with expensive exhaust cleaning systems, known as scrubbers, which can remove sulfur from emissions, will be allowed to continue burning cheaper high-sulfur fuels.

Ships must be sidelined for up to 60 days for fitting these, according to IHS Markit and DNV GL.

While freight rates have abruptly come off their recent highs, shipowners can still profit from the higher charges.

“One cargo loading at current elevated rate levels can not only finance the scrubber capex, but also account for extra costs incurred to install the scrubber at a later date,” said Kapoor, referring to the capital expenditure of fitting the scrubber.

Freight rates are expected to hold firm for the rest of the year.

“With seasonal demand support and tanker supply deficit still pronounced, we expect (fourth-quarter) tanker freight rates to stay elevated and end the year on a high note,” Kapoor said.