There may not be good days ahead for Apple in China as the US-based company faces enormous challenges.
The rising trade war between US and China is stimulating a more nationalist approach that is somehow favoring the Chinese brand Huawei.
Many influencers in China have switched to Huawei smartphones after US government blacklisted the mobile phone manufacturer on Monday over the security concerns that was followed by Google and other US-based manufacturers including Qualcomm and Intel to cut ties with Huawei with immediate effect in every way.
For most of the Chinese people, the measures against Huawei are harsh and unjust as reported by South China Morning Post, and it is strengthening “switch to Huawei” rhetoric in the country which is the second biggest market for Apple products.
Wang Zhixin, a hardcore iPhone fan, decided to switch to Huawei after almost a decade long journey with Apple.
Similarly, Sam Li feels embarrassment to pull an iPhone out of the pocket in front of other Chinese colleagues who use the Huawei smartphones.
These are only two of multiple examples of iPhone fans who are ditching their smartphones to show sympathy with their local brand, the website reports.
Already, Apple blames US-China trade rift to be the primary reason for the overall falling revenues since the Chinese market contributes a huge chunk in its annual financial statistics. In the quarter ending December 2018, it recorded $ 13.2 billion, a $5 billion lesser revenue than what it made a year earlier in the same period in the Chinese market.
Despite multiple price cuts in the Chinese market, the iPhone hasn’t risen in search trends in China on Baidu. The first quarter of 2019 proved worst than the preceding quarter.
Sales in China went down to 6.5 million units Apple shipped in the period. In contrast, Huawei shipped 29.9 million smartphones during the same period that makes the growth of 41%.
The Goldman Sachs forecasts the profit to plunge by 30% if the government of China chooses to reciprocate by banning Apple in China.
China accounts for 17% of its total revenue, and an extreme measure could turn out to be a severe blow to the US-based company that produces most of its iPhones in China.
Even if the government of China does not take such an extreme measure, mere nationalism across the country can cause a 5% revenue erosion in the next 12 months.
In case, the government does ban iPhones; Apple will straight away lose 43 million annual units sale and a $50 billion China revenue.
On the contrary, Apple is consistently striving to better the financial graphs. Apart from building a luxury brand in the region, the company has established quite a goodwill by making donations to causes such as Children’s welfare and natural disaster alleviation. It has also made considerable investments in Didi Chuxing and data and research centers.
Apple supports nearly 5 million jobs in China, out of which 1.8 million are directly associated with the iOS App Store.
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