Apple Inc. has worked hard to build China into a $44 billion growth driver. However, last week the U.S. president has made it all doubtful.
Apple to Become “Expensive Electronic Trash” in China
The iPhone enthusiasts across China are now questioning their loyalty towards the famous brand and reconsidering their attachment to the device. This happened after Donald Trump rolled out an executive order last week curbing U.S. companies from tying knots with WeChat, the super-app that has now become an essential part of everyday life in the country. The ban is scheduled to come into effect in about five weeks, it is expected to threaten to turn iPhones into costly “electronic trash,” stated Hong Kong resident Kenny Ou, who believes and sees WeChat as one of the most important software on his handset.
On Wednesday, Tencent executives on a post-earnings conference call said that they believed the ban imposed only on WeChat in the U.S. and shouldn’t affect its Chinese counterpart, known as Weixin. However, they highlighted that they too were still searching for clarity, and the sweeping language of Trump’s order could still lead to trouble for Apple.
Apple Inc. has just registered a strong quarter in China, which is its most crucial international market and where it is encountering excruciating competition from local Android rivals such as Huawei Technologies Co. — which, unlike Apple and its restricted app stores, are free to either provide WeChat directly or enable their users to access or to download it themselves. The Cupertino company’s plan of going for first-time buyers and attracting consumers with cheaper devices such as the iPhone SE could be entirely fractured if it can’t provide WeChat and U.S.-China trade tensions persist to become even worse.
WeChat over iPhone!
The flagship app from Tencent Holdings Ltd. connects a billion users globally and has a spectrum of uses ranging from chatting with friends to shopping for movie and train tickets to paying restaurant and utility bills. While questions remain on how Trump’s orders will be imposed, any ban on the use of WeChat risks to cut off a key communication bridge between China and the rest of the world and prevent U.S. companies like Starbucks Corp. and Walmart Inc. from reaching consumers in the world’s second-largest economy.
If Apple was forced to remove the service from its global app stores, iPhone annual shipments will fall by 25% to 30% while other hardware, consisting of AirPods, iPad, Apple Watch and Mac computers, may fall by 15% to25%, TF International Securities analyst Kuo Ming-chi estimated in a research note.
A survey on the twitter-like Weibo service asking consumers to select between WeChat and their iPhones has drawn more than 1.2 million responses so far, with roughly 95% of participants saying they would rather give up their devices. “The ban will force a lot of Chinese users to switch from Apple to other brands because WeChat is really important for us,” said Sky Ding, who works in fintech in Hong Kong and originally hails from Xi’an. “My family in China are all used to WeChat and all our communication is on the platform.”
Hello, I’m Anna Yeo. If you like my news coverage, please drop a good word in my inbox. I’m journalist by profession and have been part of many major reporting across the globe. I like to write crisp and factual news. I have completed my masters degree in journalism. Feel free to contact me at [email protected]