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For Apple, the Chinese market is getting tougher

Gigi Douban Oct 27, 2015
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For Apple, the Chinese market is getting tougher

Gigi Douban Oct 27, 2015
HTML EMBED:
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Apple fills in the blanks on its fourth quarter performance on Tuesday. Wall Street is projecting the company will beat expectations, and revenue will top $51 billion.

But the bulk of Apple sales are driven by the iPhone, and China is its second-largest market in the world. Will economic uncertainty there affect the company’s bottom line?

There was a time in China when if you loved someone, you’d save up for months to buy this person an iPhone. It was the ultimate gesture. And the ultimate status symbol. And all Apple had to do was be Apple. Not anymore.

“Basically the easy money days are over,” Minyuan Zhao, who teaches global strategy at the Wharton School said. One reason is that as more people have iPhones in China, it becomes less desirable. Plus, even though people there still have plenty of buying power, she says Apple needs to step up its game.

Patrick Moorhead, a tech industry analyst at Moor Insights and Strategy, said China’s economic slowdown might hit Apple’s earnings.

“The thing to balance against is that Apple is still growing in China,” he said.

So that even if urban areas in eastern China are slowly getting over their luxury brand craze, there are plenty of regions where the iPhone is still a rare gem.

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