Jan 11, 2019

Apple Performs Poorly in China and India Due to Poor Economy and Politics

Apple has seen poor iPhone sales globally last year and this has taken its toll on its share prices this year. Economists take a closer look at the cause and what to expect in the short-term.

We recently wrote a feature about the effect of the Chinese market on the global smartphone economy, and how Apple is pointing out that this growing trend is having an adverse effect on their iPhone sales. Analysts at Merrill Lynch have taken a closer look at how Chinese consumers are affecting the Cupertino-based tech company.

iPhone XR

With the United States and China currently locked in a protracted trade war with no end in sight, there is evidence that the Chinese market is hitting back where it hurts, with their wallets. Homegrown Chinese tech companies have developed cutting-edge smartphones, which encourage native Chinese consumers to stick with local products instead of going with foreign commodities. This turn of events has led to what analysts call an "informal boycott" of US products, with Apple suffering from the fallout.

The so-called "boycott" has caused demand for the new iPhones to fall dramatically in the Chinese market. Further adding to the damage is the falling value of the Yuan, leading to a poorer exchange rate to the US Dollar, resulting in smaller profit margins for Apple.

A silver lining for Apple is that analysts anticipate that the Chinese market will rebound later this year but also point out the the US economy is expected to continue to perform sluggishly, thus negating any potential gains.

With users either being satisfied with their previous-generation iPhones or simply being put off by the 2018 iPhone's premium price points, it would seem that its performance is becoming a global trend. The Indian market is currently inclined to go with either Xiaomi or Samsung, with consumers being attracted to better pricing and more high-end features.

With the current trend in the economy and the global political climate, it is safe to presume that Apple is already planning their next steps on how to bounce back to larger markets.