Apple, now China is a problem. Here's why in 5 points

Apple has a problem called China: the market until now considered the most promising for the tech giant's growth is turning into the most critical one.
After the presentation of the quarterly report, the bitten Apple highlighted how the dragon is today an obstacle rather than a driver of revenue growth.
The iPhone giant's sales in the China region in the December quarter fell nearly 13% to $20.8 billion.
Last year, cautious consumer sentiment combined with intense competition, particularly from Huawei were headwinds for the Cupertino, California-based giant.
In 2024 things may not be better according to the opinions of some analysts.
On CNBC, experts questioned Apple's challenges in China.
There are at least 5 key points of a potential crisis for the tech giant in the world's second largest economic power.
read also Apple, Q1 profit above expectations but sales in China are worrying 1.
Huawei's return Last year Huawei launched a smartphone called Mate 60, equipped with 5G connectivity and surprised the world.
The reason is that in 2019 and 2020 the US government hit the company with numerous sanctions that cut it off from the chips and technology needed for 5G, the next-generation mobile Internet that promises super-fast downloads .
The sanctions, which also limited Huawei's access to Google software, have effectively paralyzed the Chinese tech giant's cellphone business.
Huawei, which was once the world's largest smartphone maker, was actually Apple's only major challenger in China at the high end of the market.
Once Huawei phones lost competitiveness due to the lack of 5G and the absence of cutting-edge semiconductors, customers flocked to iPhones.
Now, however, with the Mate 60 Huawei sees the first signs of rebirth.
In the fourth quarter of 2023, Huawei returned to the list of the top five smartphone manufacturers in China.
Competition It's not just Huawei that challenges Apple.
Other domestic brands, from Xiaomi to Oppo, are slowly pushing into the high-end market, but at more affordable prices.
“These high-end devices are not only competitively priced, starting mostly at RMB 3,999 ($563), but also boast features similar to those of premium smartphones,” Neil Shah, partner at Counterpoint Research, said on CNBC.
“This increased competition puts pressure on both older Apple models and the entry-level models of the new series.” 3.
Consumer crisis The Chinese consumer is going through a period of crisis that could continue into 2024 and impact trust and purchases.
If the Chinese consumer remains weak, cheaper high-end models could be attractive.
“I think what we're seeing in China is a financially challenged consumer…thinking to themselves, 'I don't need to pay for this phone when I can just get a cheaper version,'” Josh Koren, founder of Musketeer, said.
Capital Partners.
Loss of appeal For a long time, Apple has been seen in China as a luxury brand with great appeal among younger audiences.
The situation could change.
“I just think the Apple brand doesn't have that shine anymore, it doesn't have that reputation among Gen Z anymore,” Koren noted.
He's often not the first to launch new products on the market and waits to see if a category takes off.
Many smartphone makers are also talking about AI-related features on their devices, something Apple hasn't done yet.
This has led many to question the Cupertino brand's innovation in the smartphone field.
Koren suggested this could be one reason for its weakness in China.
Geopolitics As with many foreign tech companies operating in China, the specter of geopolitics constantly looms.
Bloomberg, citing people familiar with the matter, reported last year that China extended a ban by ordering staff at government agencies and state-backed companies to stop bringing iPhones and other devices from foreign brands to work.
In a climate of tension and rivalry between the US and China that shows no signs of improving, geopolitics could be an obstacle to Apple's success in the Chinese nation.

Author: Hermes A.I.

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