A couple of days ago Goldman Sachs reported that bitter trade relations between the US and China might have broader impacts. The global investment banking firm warned that “Apple’s earnings would take a 29% hit if China were to retaliate against the US with a ban on sales of Apple products”.
While there is no retaliation from the Chinese government or Huawei Technologies Co., which is blacklisted by the Trump administration, Chinese consumers registered their opposition against Apple’s iPhones by turning to Huawei P30.
Huawei’s Founder Ren Zhengfei Opposes China’s Retaliation Against US
Surprisingly, Huawei’s founder, Ren Zhengfei, in an interview with Bloomberg Television, said China shouldn’t punch back Apple. If that happens, “I’ll be the first to protest.”
According to Dan Ives, an analyst at Wedbush Securities,
China’s retaliation could cost Apple about 3% to 5% of its iPhone sales in China over the next 12 to 18 months.
If China thinks to fight back, Apple could be their first target as the US government has banned Huawei. This can put Apple into a precarious condition as the Cupertino, California-based company is getting a fifth of its revenue from China and manufactures its iPhones there.
Apple is already facing a tough situation in China as locals have shifted to Huawei and other Chinese brands of smartphones.
American companies are facing challenges from slowing global economy; China is the first and fast-growing consumer market in the world. Notably, Apple is struggling to gain its foothold in India, which is considered to be the second largest market in Asia.
In case China retaliates, what kind of retaliation it can take? Looking back in 2017, China demonstrated its power to South Korea, which decided to deploy a missile shield. Following this, the Chinese government stopped travels to South Korea and this decision incurred a huge loss to the cosmetics companies in South Korea.
Chinese tourists were the main consumers of cosmetic products manufactured in South Korea. Additionally, Chinese authorities shut down stores of Lotte Shopping Co. Local consumers in China boycotted South Korean products; this dealt a big blow to Hyundai Motor sales.
People in China might open retaliation against the US brands from hotels to sportswear to even Captain America. Chinese state media Xinhua News Agency earlier said that China is “well armed to deliver counterpunches.”
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