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Apple's brand image in China is wrecked, expected to lead to big iPhone sales decline

Published: May 29, 2019, 8:40 AM

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As if Apple's troubles in the world's largest smartphone market weren't already bad enough, iPhones have been reportedly facing somewhat of an "informal boycott" from consumers in China for several months now as a consequence of a heated trade war with the US that's showing no signs of a de-escalation.

Said boycott might be ramping up as uncertainty continues to hover over Huawei's thriving global smartphone business. While it remains highly unlikely that the Chinese government will retaliate against Trump's divisive ban on US companies collaborating with Huawei by kicking Apple out of the country, analysts are predicting huge drops for iPhone sales in the region before long.

Chinese patriotism means Apple's local tale of woe will continue

iPhones may get a major vote of confidence from Huawei CEO and founder Ren Zhengfei, who was recently quoted as describing Apple as his "teacher", but most people in China don't exactly agree with those words of praise for a foreign tech giant. The nation's smartphone shipment charts were dominated by domestic manufacturers way before trade conflicts escalated, with Huawei in the lead back in Q3 2018, for instance, followed by Vivo, Oppo, and Xiaomi.

Apple's loss will undoubtedly be Huawei's gain

Apple was ranked fifth in China between July and September last year, actually climbing a spot in Q4 2018 sales before falling back to fifth place during the January - March 2019 timeframe. More importantly, regional iPhone shipments declined throughout this period compared to the results posted in the same three quarters of 2017 and 2018. The biggest drop came in the first three months of 2019, when Apple was only able to ship 6.5 million iPhones in China, according to Canalys, down a staggering 30 percent from the 9.3 million units sold at the beginning of the previous year.

Still, certain experts claim China accounts for an important 18 percent of "all Apple sales", a figure that could soon be cut in half as even more Chinese citizens will feel the urge to turn their backs on Apple and buy "domestic mobile brands." Unlike Huawei, which seems to be maintaining and even improving its brand image in China, Apple's brand is "being damaged" as we speak, according to Citi analysts, with a particularly bad deterioration of the company's reputation noticed "very recently."

How bad could things get for Apple in China and worldwide?

Obviously, Apple doesn't stand to lose as much money and as many sales as Huawei due to all these political tensions and complications. But half of 6.5 million iPhone shipment units in a single quarter is still a lot. Not to mention half of the 11.8 million units the Cupertino-based tech giant reportedly sold in China during the final three months of 2018. Of course, the 50 percent drop is just an educated guess from a reputable provider of financial services, following perhaps an even more daunting prediction recently made by Goldman Sachs.

That 30 percent drop could be followed by an even bigger 50 percent decline in regional iPhone sales

Analysts at that particular investment firm think Apple could shed as much as 29 percent of its global profits as a result of its brand "deterioration" in China in a "worst case scenario" that's however unlikely to materialize. Probably the biggest problem is that iPhone popularity has been steadily declining in virtually all corners of the world, making Apple's mission to offset near-guaranteed regional losses one even Tom Cruise would find tricky to complete.

In Q1 2019, for instance, Apple's worldwide smartphone sales numbers dropped between 9 and 16 million units, according to different research firms, which naturally means China is far from the company's only problem right now.

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Adrian, a mobile technology enthusiast since the Nokia 3310 era, has been a dynamic presence in the tech journalism field, contributing to Android Authority, Digital Trends, and Pocketnow before joining PhoneArena in 2018. His expertise spans across various platforms, with a particular fondness for the diversity of the Android ecosystem. Despite the challenges of balancing full-time parenthood with his work, Adrian's passion for tech trends, running, and movies keeps him energized. His commitment to mid-range smartphones has led to an eclectic collection of devices, saved from personal bankruptcy by his preference for 'adequate' over 'overpriced'.