Apple’s Chinese Protection During The Trade War

I have been talking to an executive in China who tracks the supply chain. I asked for his views on Apple’s manufacturing exposure during the trade wars and whether China is reluctant to place any significant tariffs or restrictions on Apple.

Most people don’t know that Apple, through their multiple Chinese factories, have over 1 million Chinese workers making their products. This is an important fact. This executive told me that China knows it has to tread lightly when it comes to Apple. As I pointed out in last week’s Think.Tank column, most PC and Smartphone vendors are already looking to move at least US bound products to manufacturing centers outside of China as soon as they can.

Most of the PC vendors are moving in this direction. However, we have heard very little about whether Apple plans to move some manufacturing out of China or if they feel somewhat protected given the large amount of Chinese workers Apple employs. The US also has to be careful with Apple as its products are still in high demand world wide and Apple employs 304K around the world and 47K in the US.

China is about to release a list of US companies that Chinese companies cannot do business with but Apple will not be on that list. For both China and the US, Apple is highly strategic to their economies. This should protect them at this time. Even Apple’s biggest competitor in China is against any moves that would hobble Apple in any way in China. Huawei CEO, Ren Zhengfei said of the call to ban Apple, “That will not happen, first of all. And second of all, if that happens, I’ll be the first to protest.”

However, the executive I spoke with, who lives in China, says that even though Apple’s products are still viewed as the best in the market, there is real backlash coming from some Chinese consumers who are being pressured to only buy Chinese made products. Even worse is a trend being seen from some who have Apple iPhones and Apple Watches who are being shamed by friends who feel China is being persecuted by the US tariffs and make them feel “embarrassed” for owning an Apple product.

Ironically, these “ shamer’s” are pushing people to buy Huawei’s smartphones instead and last week, there were reported cases that Huawei phones are dying by the scores in Hong Kong and throughout China.

At the moment, I see a consumer backlash as the biggest threat to Apple in China Unfortunately for Apple, this is totally out of their control. While I do see some protection from them on the tariff side from China and the US, the anti-Apple movement could pick up steam and impact their sales in China.

Let’s hope that will not happen but it is something that Apple may need to attack with a marking program in China if this shaming push gains more traction.

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Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.

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