DEBATE: With Apple sales slowing and the share price tumbling, is China to blame?
With Apple sales slowing and the share price tumbling, is China to blame?
Neil Goddin, manager of the Kames Global Equity fund, says YES.
Unlike the western world, the Chinese people are likely to support their country in the midst of a trade war by not buying American if they don’t need to. They would not have to be told to do this; it may even be somewhat subconscious, but it is the way they are.
Couple this with the fact that Apple products are very expensive, and that the competition (especially from Chinese companies) is better than it ever used to be, and you have enough circumstantial evidence to deduce that going without an iPhone in China is not such a tough thing to do.
What is interesting is that the Chinese are not alone in taking this view. Electronics is a tough industry and consumers are price-sensitive, especially if they believe that they may be entering a period where belts need tightening.
Plus, the Samsung, Huawei, Xiaomi and now even Google phones are actually pretty good – some even say better than iPhones. But most importantly, they are cheaper. And right now, that matters.
Leon Emirali, entrepreneur and investor, says NO.
It’s always convenient for chief executives to blame external factors for commercial slumps, but the reality is that Apple’s slowdown is down to much more than just “China”.
After years of supremacy, Apple’s competitors are catching up. The likes of Huawei, Samsung and Google have taken a chunk of Apple’s market share and, at times, it feels like Tim Cook and co. have run out of ideas.
Apple relies on around 60 per cent of its revenue from iPhone sales. To counter the consumer trend of less frequent phone upgrades, Apple hasn’t done much else other than raise prices. Although its products are still among the best in the market, innovation-hungry tech consumers (and investors) are looking for something more.
Expect Apple to now prioritise its services division and we could see a flurry of big-name acquisitions.
The lesson from this is clear: regardless of whether you’re selling in China or anywhere else in the world, consumers demand regular innovation at realistic prices.