Apple’s iPhone is not on the list of China’s latest tariff hike, but that does not mean it’s in the clear. The world’s first US$1 trillion company is coming under increasing pressure as many claim it has an unfair advantage by making big money as the Sino-American trade war hots up.
In an article headlined “Strong sales of US brands including Apple give China bargaining chips in trade row,” the People’s Daily warned that Apple’s success could provoke public anger as some Chinese firms struggle.
“China doesn’t want to close its doors to Apple despite the trade conflict, but if the US company wants to earn good money in China, it needs to share its development dividends with the Chinese people,” said a commentary in the official mouthpiece.
Apple has been benefitting from China’s low-cost production chain for its popular iPhone parts and components or assembly work, but some statistics showed Chinese processors only made 1.8% of the total profits.
China is the largest overseas market of Apple, which recently reported 19% sales growth to US$9.6 billion in the country, according to the financial results for its fiscal third quarter ended June 30.
The People’s Daily argued that it is impractical and unreasonable to kick the company out of China, but added “if Apple wants to continue raking in enormous profits from the Chinese markets amid trade tensions, the company needs to do more to share the economic cake with local Chinese people.”
The report was part of a campaign of criticism by state-owned Chinese news outlets to leverage public opinion in an escalating trade war. Earlier Asia Times reported Apple had failed to block gambling advertisements as well as pornographic novels transmitted through its messaging app.
Apple is not on the list of the additional US$16 billion worth of imports from America that would be subject to 25% tariffs in revenge for the same tariffs imposed on Chinese goods imposed by the Trump administration earlier this week.
Apple is ranked No.5 in the mainland mobile phone market behind the top four Chinese makers, but it surpassed all of them in terms of profitability.
iPhones are well-liked by the Chinese. About 6.5 million Chinese were reported to have made reservations for iPhone X pre-sales in China within the first three days of its release, accounting for some 54% of global reservations.
At the moment, many are waiting to see how Apple will market its new iPhone next month. To cater to growing Chinese consumers needs, Apple is reported to have made a dual SIM-phone available in the new model.
Even if this new model is a success, Apple might need to do more to please its Chinese consumers – and the government behind them.