Investors just received a worrying report about iPhone sales in China ahead of Apple’s pivotal 2018 holiday earnings report slated for Tuesday, January 29.

Apple warned investors earlier this year that iPhone sales in Greater China came in lower than expected. We’ll have to wait for the official numbers from Apple tomorrow, but according to data firm Canalys, total smartphone sales dropped 15% year-over-year in Q4 2018 with Apple taking one of the biggest hits.

Tim Cook sent investors a letter at the beginning of January revealing Apple’s earnings would come in lower than expected. Greater China was listed as the biggest problem. Based on Canalys’ report, even some of China’s top smartphone makers took a hit.

Oppo and Xiamo suffered a 2% and 6% reduction in sales. Huawei and Vivo saw their sales increase by 16% and 9% respectively. Apple, which is 5th most popular smartphone company in China, saw its sales drop 13%. All other smartphone manufacturers experienced a 60% drop in smartphone sales in China during 2018.



Despite the increasing local competition in China, actually has bigger problems that it needs to address if it wants to gain market share.

“As its services division becomes more important in China, it is vital for Apple to maintain or grow its installed base of iOS users,” said Canalys analyst Mo Jia. “Apple must reexamine its China strategy, and find a way to revive its high-end brand image, in order to align with the purchasing behavior of local middle-class and upper-class demographics.”

Apple might see its sales continue to slip in 2019 too. Canalys estimates that smartphone sales in China will shrink another 3% in 2019. If that happens, Apple could be looking at its fourth straight year of lower sales in the second-most important smartphone market in the world.