Price reduction difficult to solve the pain of sales in China Apple “second home” to change location?

Apple is a high-end smartphone manufacturer designed in California and assembled in China. The company has left a footprint all over the world. Apple’s way of doing business in different world economies makes it a compatible “gamer”. However, the company still has a long way to go. Apple takes advantage of Western products and services.

Most of the users come from the iPhone, MacBook and ipd. Apple’s strategy to build sales has been successful, and Apple’s service platform has been widely recognized and accepted. The United States and Europe have been well-structured markets. There is strong demand for the company’s products in both countries.

Now that Apple products are nearing saturation in the U.S. and Europe, the company can only look for growth opportunities in those regions. Therefore, “index” growth is unsustainable. Apple needs to be self-sustaining and looking for greater growth opportunities. For now, the company is shifting its focus to the Asian market. Apple has been in Asia since 2009. Now, Apple is focusing on future growth in the region.

Apple lands in China

Apple landed in China with a top-secret phone project code-named “Purple 2.” A January 2012 Cnet article noted that in 2007, Steve Jobs, then Apple’s chief executive, discovered a serious display flaw a month before the iPhone was released. Cnet points out that the device’s screen is made of hard plastic and can be scratched. By this time, Jobs had been using the prototype for weeks. “People put their phones in their pockets and they put keys in their pockets,” he said. I don’t sell scratched products. I want a glass screen, I want it to be perfect in six weeks. “

The new development has drawn Apple’s attention to the famous Chinese manufacturing industry. A former Apple executive described how Factories in China have changed, Cnet reported. Apple’s new smartphone screen was designed at the last minute, forcing a major overhaul of the assembly line. When the new screen began arriving at the factory at midnight, a supervisor mentored the factory’s 8,000 workers. Within 96 hours, the factory produced more than 10,000 iPhones a day. “The speed and flexibility is amazing,” says the executive. He added that there are no factories in the United States to match.

While Apple has taken advantage of China’s manufacturing capabilities, it has also taken advantage of the region’s more than 1 billion potential smartphone consumers.

Apple has a place in the Chinese market

The Chinese market has always been an active consumer market for Apple products. In October 2015, an article on The Verge discussed Apple’s entry into the Chinese consumer market. High-end products are attractive to high-end consumers. Apple products are considered a symbol of luxury and a popular offering. Apple has a foothold in the country’s smartphone market with its large smartphone consumer base. Today, China is Apple’s third-largest source of revenue. Greater China, which includes Mainland China, Hong Kong, Macau and Taiwan, generated $44 billion in revenue in fiscal 2019, according to Apple’s 2019 press release. The money is equivalent to 17% of the company’s total income.

Apple products have a number of high-end consumer “support.” Meanwhile, budget consumers buy these products during the discount season. Sometimes they buy refurbished products. According to a 2014 article about the canadian iPhone, China has a huge market for refurbished technology products. These factors have been affecting business in the region. Over the past few years, however, Apple’s development path in China has been bumpy. Now, with western markets saturated, Apple cannot afford to lose the Asian market.

Apple’s problems in China

A report by Point Research showed that while Apple’s revenue in China had been good, the company’s market share in the third quarter was only 8 per cent. Despite the increase in sales, There are two main reasons for Apple’s decline. The first issue is international relations. The second problem is Apple’s understanding of the Chinese market, which has stalled in China.

More than half of Apple’s products are made in China. The company has China as a manufacturing hub because its specialization is a large-scale manufacturing and cost-effective labor market. However, if tariffs are imposed, Apple will lose its cushion against low production costs, which will ultimately affect its pricing strategy. Kate Huberty, an analyst at Morgan Stanley, estimates that if a 25 per cent tariff were imposed on the iPhone, the base price of the iPhone XS would be capped at an additional $160.

What if Apple decides to leave China?

If Apple decides to move its manufacturing division out of China, it will face even bigger problems. Foxconn, Apple’s biggest manufacturer, said it could move its production arm out of China, but that it was too costly and complex. “Apple is making big bets on Foxconn and China, and we estimate that in the most optimistic scenario, Apple will only be able to move 5 to 7 percent of the iPhone’s production to India next year,” Wedbush analyst Dan Ives said in a June report for Fortune magazine. “India is a viable option. However, the setup of such a large unit takes time, which will affect the production of the iPhone. India’s labour market is doing well in an area different from China’s. Therefore, it is unrealistic to compare China’s manufacturing capacity with India’s.

Another major problem in moving production outside China is that most of the components are made locally and are close to Apple’s manufacturing plants. If Apple moves out of its manufacturing facilities in China, importing parts will be an additional cost. In addition, if Apple’s manufacturing arm leaves China, it would jeopardize a potential consumer base of more than 1 billion people, which would affect Apple’s revenue. However, moving production to the United States will increase Apple’s production costs. “Companies may pass on higher costs to consumers, which can affect the pricing of their products.”

Fuzzy understanding of the Chinese market

As we discussed earlier, Apple’s sales in China are driven by high-end technology consumers. There is also a huge market that Apple could have ignored before. Now, the company will have to focus on this market. In terms of Apple’s services, the company doesn’t understand that China is running on an integrated app platform called WeChat. The app offers phone calls, text messages, taxis, social media and business-related services. So services like iMessage and Apple Pay don’t produce much.

Apple is a high-end smartphone maker. However, the company’s Chinese rivals are also competing in high-end smartphones after taking a major stake in the cheap handset market. The shift sent Apple’s market share to 8% in the third quarter, according to The Point Research.

Affecting the psychology of users, Apple has introduced a cost-effective battery replacement scheme. The move means consumers can use high-priced technology for longer periods of time. However, the extended equipment upgrade cycle has slowed the pace of new purchases. The Chinese refurbishment market has also affected Apple’s sales in the region. This partly allows “below-budget” consumers to experience the quality of Apple’s iPhone.

Today, Apple’s revenue stream has shifted from products to products and services. These services are part of the Apple ecosystem and can only be run on the company’s products. As a result, Apple will have to sell its products to see the growth of its services.

The future in China

Apple will have to roll out more user-centric products and have better pricing. contributed to the U.S. economy. To develop its products and services division, the company will have to transform its “second home” china.

Author Umar Khan

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