Apple has big drop in iPhone sales in China

Apple reports a significant decline in iPhone sales in mainland China during the first quarter of 2019. As a result, there was a drop also in employee pay and benefits and even layoffs and resignations at assembly plants.

Reasons for the decline in China iPhone sales

Apple Chief Executive Officer (CEO), Tim Cook, said: "While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in greater China." Cook also noted: "We believe the economic environment in China has been further impacted by rising trade tensions with the United States."

During the first quarter of this year, revenue dropped 26.7 percent in greater China, Hong Kong, Macao and Taiwan.

A recent Digital Journal article discussed Huawei's cheaper phones, and how they are impacting the ability of Apple and Samsung to sell premium smartphones in the region: "Samsung at 17 percent and Apple at 16 per cent approximately still are first and second in terms of smart phone market share. However, at 15 percent Huawei is nipping at their heels. Both are also losing share in the fourth quarter compared to the same time period the previous quarter. Apple lost two percentage points and Samsung about one."

Mark Zandi, an economist at Moody's Analytic,s had a different take on events: "Apple is a bellwether. The iPhone is something that everyone knows and buys, and if people aren't buying it, then that's a pretty good sign they're having a hard time. If people aren't buying iPhones, they're probably not buying everything else. It symbolizes how deep China's economic problems are, and we can connect the dots right back to the trade war."

Sales decline has a negative effect on working conditions

The world's largest iPhone assembly plant Foxconn in the city of Zhengzhou capital of Henan province has seen working conditions deteriorate. Workers reported that their salaries were unexpectedly cut at the end of 2018. One anonymous Foxconn worker claimed that peak production lasted only 20 days last year, resulting in a salary cut from about $598 in October last year to just $447 in the next month November.

Formerly published in Digital Journal