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China crisis hits Apple

by on05 May 2017


Seeds of doom


The tax-dodging Fruity Cargo Cult Apple once bet the farm on China and is now having to eat its words.

Soon after the death of Steve Jobs, Tim Cook bragged that Apple was going to take over China and that was going to maintain the company's record growth.


At the time, we cynically pointed out that China was a hard nut for Apple to crack. While the Chinese were keen on high end phones they were also careful buyers and wanted bangs for their bucks. They would not, like their American counterparts, buy something because of a logo on the back unless it offered them something new.

Sure enough, Apple did well the first time it released kit to the Chinese market but failed to offer anything new or different in subsequent line ups. Matters were compounded by the fact local Chinese manufacturers started to make cheaper phones.

Now Apple is starting to see even more serious setbacks in shipments of iPhone devices in China.

In the first quarter of 2017, China-based brands including Huawei, Oppo and Vivo managed to continue ramping up their shipments, entirely at Apple’s expense.

Data released by IDC shows that Apple saw its iPhone shipments in China slide 26.7 percent on year to 9.6 million units in the first quarter. Apple now has a 9.2 percent share compared to 11 percent of the earlier quarter and 12.7 percent of a year earlier, the data showed.

Apple revenues generated from the China market declined 12 percent on year to $16.2 billion in the January-March period, according to Apple's latest financial report.

It is not as if the market is in the doldrums. Huawei managed to ramp up its shipments by 25.5 percent on year to 20.8 million units in the first quarter and reclaimed the top-vendor position from the local rival Oppo.

Huawei also saw its share climb to 20 percent in the quarter, up from 16.8 percent a quarter earlier and 16 percent a year earlier, IDC said.

Oppo ranked second with shipments totaling 18.9 million units for an 18.2 percent per cent share.

What the figures show is that rather than being Apple’s saviour, the company is getting its clock well and truly cleaned in China.

If Apple had a cunning plan, perhaps increased its profile, or cutting prices, or coming up with a new product, then it could at least expect to see some turnaround in these figures.

But our prediction is that it is going to get much worse. The Chinese have learnt all they need to from Apple and are doing the same things much better.

Huawei has established more than 1,000 experience shops in core cities in China recently to counter the established channels set up by Oppo and Vivo.

Huawei also aims to set up over 15,000 retail shops globally, the sources added.

Oppo now has a total of over 200,000 online and offline sales outlets in China, while Vivo has 250,000 offline sales outlets, indicated the sources.

All this means that Apple is the IBM in the market. It is too old, too slow and lacking in innovation. It pretty likely that it will be in tiny part of the market in a couple of years and forgotten. This will of course have knock on effects on its ability to grow.

Last modified on 05 May 2017
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