China – US relationship, Apple edition

These days the news is flooded with USA and China and their seemingly never ending dispute.

It started just like a game, USA wasn’t happy with the Chinese big surplus in the trade with USA and they wanted a fair fight. Many American companies are using factories in China to produce goods and it was curious to see what will happen. There are interesting side effects in this never ending dispute.

Appeal no more!

The first side effect was the market share of Apple in China. Initially Apple was considered as a luxury brand and it had a very nice margin in one of the highest growing economy in the world. It was a win-win situation. Apple was assembling their phones in China and the Chinese were buying lots of phones. It was a very passionate relationship.

I even read a story somewhere that a man thought it was a romantic to give as a wedding gift to his girlfriend a heart-shaped structure made from iPhones.

After the beginning of the trade war, Apple lost its appeal and many corporations and citizens of China are turning their backs to Apple’s products and are moving towards products made in China. Here the biggest winners are their home brands. The brands such as Huawei, ZTE and OnePlus.

At the moment, the whole relationship between Apple and China seems more like a custody trial and not like a romantic relationship like it once was. And in such situations, the Apple response was imminent.

According to TechCrunch: https://techcrunch.com/2019/09/23/apples-new-mac-pro-will-be-made-in-the-u-s-after-all/

Apple is moving their production back to the USA. It is early to make any prediction about what this will mean for the future of the company and its presence in the Chinese market, however this seems like a clear trend. Pro-western countries being discourage by the protectionism of the Chinese market and are moving away from it.

The bigger question remains, is this the right move for Apple, or the top management knows something that we don’t. If in the long run the relationship between China and USA remains unchanged, this will be a winning move for Apple, otherwise this could cost them billions of dollars, market share.