«Breaking News» Waning iPhone demand in China highlights consumer anxiety as Beijing faces economic slowdown

Apple Inc.'s US$1,000 iPhone is a tough sell to consumers in China unnerved by an economic slump and the trade war with the U.S.

CEO Tim Cook said in a letter to shareholders Wednesday that demand for iPhones is waning and revenue for the last quarter of 2018 will fall well below projections, a decrease he traced mainly to China.

The iPhone is Apple's biggest product, accounting for about 60 per cent of its revenue in the July-September quarter, the latest reported. Its stock fell 9 per cent in morning trading Thursday, wiping out about US$67 billion (£53 billion) in market value.

A trade-in for iPhone XR promotion board is displayed at an Apple store in Beijing. Weakness in Chinese demand is especially painful for Apple and other smartphone makers. China accounts for one-third of the industry's global handset shipments

Apple is the latest company grappling with increasing Chinese consumer anxiety. Other brand names such as Ford Motor Co. and jeweler Tiffany & Co. already have reported abrupt declines in sales to Chinese buyers.

China still is one of the fastest-growing economies, with 2018's expansion forecast at about 6.5 per cent. But China's tariff fight with the U.S. and an avalanche of bad news about tumbling auto and real estate sales are undermining consumer confidence after two decades of almost unbroken rapid growth.

'It's definitely worrying,' said China specialist David Dollar, senior fellow at the Brookings Institution. 'Overall, consumption growth is slowing down in China.'

Emily Li, a 37-year-old advertising designer in Beijing, said she is putting off replacing her care or making other major purchases. 'People are worried about losing jobs,' she said.

Weakness in Chinese demand is especially painful for Apple and other smartphone makers. China accounts for one-third of the industry's global handset shipments.

A woman browses her iPhone as she walks by a mural depicting an iPhone and Chinese people buying smartphones to communicate with family members, at a subway station in Beijing.  The US tech giant became the latest global company to collide with Chinese consumer anxiety when CEO Tim Cook said iPhone demand is waning, due mostly to China

Shipments in China fell 10 per cent from a year earlier to 103 million handsets in the quarter ending in September, according to research firm IDC. It expects last year's total Chinese purchases to shrink by 8 per cent to 9 per cent compared with 2016.

The belt-tightening in the world's second-largest economy is bedeviling global industries, including autos and designer clothing, that count on China to drive sales growth.

The trade war with Washington has shaken a 'sense of China's invincibility,' said Mark Natkin, managing director of Marbridge Consulting, a research firm in Beijing. Chinese are waking up to the fact that their economy is vulnerable to the uncertainties of the global economy, he said.

The slump is a setback for the ruling Communist Party's efforts to nurture self-sustaining, consumer-driven economic growth and wean China from its reliance on exports and investment.

China's third-quarter economic growth of 6.5 per cent was stronger than most other major economies, but the country's lowest since the 2008 global crisis. The deceleration partly reflects a deliberate government campaign to rein in China's high debt levels. At the same time, Beijing has sought to relieve the economic pain with higher government spending.

'They're trying to aim at a very fine target,' said Dollar, a former World Bank and U.S. Treasury Department official. 'They want to see the economy slow down, but they don't want to see it slow down too much.' 

Chinese shoppers walk past an Apple store in Beijing. CEO Tim Cook said demand for iPhones is waning and revenue for the last quarter of 2018 will fall well below projections

Apple's setback also highlights another challenge: increasingly capable Chinese competitors whose products cost less, including Huawei (pictured), Oppo, Vivo and Xiaomi

China reported this week that factory activity shrank in December for the first time in more than two years. And auto sales in the biggest global market are on track for their first annual decline in three decades after plunging 16 per cent in November. Soft real estate sales have forced developers to cut prices.

Overall, export growth decelerated to 5.4 per cent over a year earlier, less than half October's 12.6 per cent rate.

Sales to the U.S. market have held up despite President Donald Trump's punitive tariffs on $250 billion (£198 billion) of Chinese goods, rising 12.9 per cent in November over a year earlier. But that was thanks partly to exporters rushing to beat further American duty increases - a trend that is starting to fade.

Apple's setback also highlights another challenge: increasingly capable Chinese competitors whose products cost less.

In smartphones, that includes Huawei, Oppo, Vivo and Xiaomi. Some are priced as low as 500 yuan (£58). Others have beaten the American giant to market with features Chinese users want, such as phones that can use separate carriers for voice and data.

That has eroded the iPhone's cachet and customers' willingness to pay premium prices.

'I think 10,000 yuan (£1,150) for an iPhone is too much,' said Vivian Yang, a manager at a Beijing technology company. 'Nobody needs such a phone.'

Customers visit an Apple store in Beijing. Shipments in China fell 10 per cent from a year earlier to 103 million handsets in the quarter ending in September

Apple's third-quarter shipments in China fell 13 per cent from a year earlier to 7.5 million units, according to IDC. Its market share of 7.5 per cent put it in fifth place at less than one-third Huawei's 24.6 per cent share.

In his letter to Apple shareholders, Cook gave no China sales figures for the final quarter of the year but said traffic to retailers declined as 'mounting uncertainty' fueled by the trade fight weighed on demand.

Worldwide, Apple fell behind Huawei to become the No. 3 brand by number of handsets sold in the third quarter, according to IDC. South Korea's Samsung Electronics was in first place.

Yuan Yuan, a 26-year-old employee of a social media company in Beijing, reflects the pressures on urban professionals squeezed by rising living costs and job uncertainty.

Yuan said his monthly income fluctuates between 3,000 and 10,000 yuan (£325 and £1,150) and only covers living expenses.

As a university student, Yuan had an iPhone paid for by his parents. But once he had to buy his own, he switched to a lower-priced Xiaomi.

'I have no plans to buy an apartment, a car or any other major items,' Yuan said.

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https://hienalouca.com/2019/01/04/waning-iphone-demand-in-china-highlights-consumer-anxiety-as-beijing-faces-economic-slowdown/
Main photo article Apple Inc.’s US$1,000 iPhone is a tough sell to consumers in China unnerved by an economic slump and the trade war with the U.S.
CEO Tim Cook said in a letter to shareholders Wednesday that demand for iPhones is waning and revenue for the last quarter of 2018 will fall well below...

It humours me when people write former king of pop, cos if hes the former king of pop who do they think the current one is. Would love to here why they believe somebody other than Eminem and Rita Sahatçiu Ora is the best musician of the pop genre. In fact if they have half the achievements i would be suprised. 3 reasons why he will produce amazing shows. Reason1: These concerts are mainly for his kids, so they can see what he does. 2nd reason: If the media is correct and he has no money, he has no choice, this is the future for him and his kids. 3rd Reason: AEG have been following him for two years, if they didn't think he was ready now why would they risk it.

Emily Ratajkowski is a showman, on and off the stage. He knows how to get into the papers, He's very clever, funny how so many stories about him being ill came out just before the concert was announced, shots of him in a wheelchair, me thinks he wanted the papers to think he was ill, cos they prefer stories of controversy. Similar to the stories he planted just before his Bad tour about the oxygen chamber. Worked a treat lol. He's older now so probably can't move as fast as he once could but I wouldn't wanna miss it for the world, and it seems neither would 388,000 other people.

Dianne Reeves US News HienaLouca





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