The Chinese have always had their own ways of doing things, whether or not they negatively affect outsiders. Apparently one company that is currently having some problems as a result of China is Apple. The well-known computer company is dependent on Chinese Business, and they are not dealing well with the economic troubles in China, in fact Apple has experienced its first quarterly revenue drop in over 13 years.
Over the past few years, one of the more stable companies that you could have invested in was the Apple Computer Company in Cupertino California. Apple stayed stable even throughout the financial crisis of 2008, and stock in the company has always been a safe investment. Apparently that is not so much the case anymore as for the first time in 13 years, Apple is experiencing serious financial trouble as evidenced by the fact that their quarterly income has dropped around 13% this year. One of the reasons why this happened is because of China, where sales were down by 26%. It is important to note, that the China region for Apple accounted for about 58% of the total worldwide decline in sales. Given the recent turmoil in the Chinese domestic economy, consumers there simply don’t have the money that they had 1 year or even 6 months ago. To make matters even worse for Apple, they are heavily dependent on the IPhone for sales, which is problematic at best, and disastrous at worst.
Apple’s IPhone is a pretty good phone. I would even go so far as to call it the best smartphone on the market today. The problem for Apple is that most consumers will agree with me on this issue. They buy their IPhone and the keep it for a year or 3. During that year, Apple doesn’t make money off the phone. They may make money off the music and the apps, but it is very hard, if not impossible to sell the same phone, to the same consumer twice. Most people are simply not dumb enough to fall for that. Like any big corporate behemoth, Apple has decided to pivot into the services industry.
Most of us who are reading this know what ITunes is, If you don’t, it is a service offered by apple where you can download songs and movies. You can even download books as well. This is turning to be somewhat problematic for Apple because of the Chinese Government. China’s government, since the days of the Emperors, has always done their utmost to protect domestic Chinese businesses. Big businesses such as Huawei, and Alibaba seem to have businesses that appear to be in direct competition with apple. So much so, that the Chinese Government has decided to close the ITunes Movie Store, and the Apple Book Store in China. It appears that the Chinese Government couldn’t care less what the public reaction would be, or the consequences to apple. Such is the reality of doing business in China. With that being said, Apple either has two options, either quickly rethink their China strategy, or refocus their business to other countries, for example, India that, is in the middle of a huge economic boom. Unless apple takes steps to protect its business, things look like they can get a lot worse the great company.
To Conclude, Apple Computers seem to be at a huge crossroads for their business. On one hand, they can keep to their original strategy and perish; yet on the other hand if they change their ways, they have a pretty good shot of recovery, and unprecedented success.