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  • Anti-Apple Campaign in China Estimated to Cost Apple $13 Billion in Sales


    China’s recent state-sponsored anti-Apple campaign according to one estimate cost Apple $13 billion in sales in the country. Citi’s Glen Yeung recently examined the financial impact of previous Chinese state-sponsored campaigns against other companies.

    China's recent state-sponsored, anti-Apple campaign might not just be empty rhetoric: it could, according to one estimate, cost Apple $13 billion in sales in the country. China’s government has instituted similar pushes against YUM Brands (part of KFC), Toshiba, and Hewlett-Packard. For those of you unfamiliar with it, the negative press led to YUM Brands taking a 20% year-over-year sales hit in China for January and February, while Toshiba lost its number one spot in Chinese notebook sales following a 1999 state-media report that the Japanese manufacturer treated Chinese and American customers differently. Yueng chose HP as a template for the potential damage of such a campaign to Apple, stating the following:

    Recall that a similar campaign hit HP in 2010, leading to a ~50% reduction in their PC share in China. Apple derives ~16% of its sales in China (CY12) and China accounted for ~24% of Apple's revenue growth in the past 2 years (2010-2012). If Apple were to lose as much as 50% of their China market share, this would equate to ~$13.1B/$3.62 in revenues/EPS. We add this to our list of concerns about Apple's market share dominance and still do not recommend the shares at this time.
    His report went on to discuss the difficulties the negative campaign could produce for Apple’s efforts to get the iPhone onto China Mobile, the world’s largest wireless carrier. Not only that but such a campaign could also potentially impact on Apple’s brand value. With these factors in mind, Citi couldn’t recommend buying Apple shares at the time and the firm stood by its December decision to downgrade its Apple rating to Neutral.

    China just surpassed the U.S. as the largest market for smartphones and tablets and Apple has been trying to make its products more affordable in that increasingly important market. Apple CEO Tim Cook issued an apology for the Chinese warranty issues that appear to have sparked the Apple backlash, even while the effectiveness of the campaign remains unknown. Cook ended up blaming the “misunderstandings” stemming from Apple’s lack of public communications and offered the company’s “sincere apologies.” His letter also came with four major adjustments to Apple’s warranty policy in China. These changes included increased supervision and training for Apple Authorized Service providers, a new feedback system, a “concise and clear” statement on its website about repair and warranty policies, and new policies for the iPhone 4 and iPhone 4S.

    Source: CNN via AppleInsider
    This article was originally published in forum thread: Anti-Apple Campaign in China Estimated to Cost Apple $13 Billion in Sales started by Akshay Masand View original post
    Comments 13 Comments
    1. Mahboi's Avatar
      Mahboi -
      What does China want?
    1. kddo14's Avatar
      kddo14 -
      for this to work, you have to make the strikingly ignorant assumption that apple == hp. way to go Philip Elmer-DeWitt, i'll bet Booker is pissed he got you that job now.
    1. slim.jim's Avatar
      slim.jim -
      **** China
    1. xhazex9x's Avatar
      xhazex9x -
      Good apple deserves this for being such diickheads to everyone including their customers
    1. cgfusion's Avatar
      cgfusion -
      Remind me again why the US continues to support China by buying their crap, STOP now,

      xhaz, you are a uninformed jerk wad. How anti American are you? My god, its slime like you that are ruining this Country. Move to China......
    1. quidam_brujah's Avatar
      quidam_brujah -
      The "Free Market" is a myth -- it doesn't exist. All markets are created and controlled by governments. Unfortunately, unlike the US & Europe, the Chinese 'market' is a joke being played on everyone outside that country. China wants to allow R&D and production into China until local companies can learn how to do it, then it wants to make sure that those local companies become the market leaders. Ask Cisco, Motorola, Samsung and Ericsson how they feel about Huawei. They're doing exactly the same thing that the Japanese did in the 70's & 80's but with the benefit of being supported by the government.
    1. unison999's Avatar
      unison999 -
      Quote Originally Posted by cgfusion View Post
      Remind me again why the US continues to support China by buying their crap, STOP now,

      xhaz, you are a uninformed jerk wad. How anti American are you? My god, its slime like you that are ruining this Country. Move to China......

      Crapple =/= America.

      Apple is manufactured in China, keeps their money outside the country because Apple do not want to pay the taxes to bring the money into U.S... How American is Apple?

      Quote Originally Posted by quidam_brujah View Post
      The "Free Market" is a myth -- it doesn't exist. All markets are created and controlled by governments. Unfortunately, unlike the US & Europe, the Chinese 'market' is a joke being played on everyone outside that country. China wants to allow R&D and production into China until local companies can learn how to do it, then it wants to make sure that those local companies become the market leaders. Ask Cisco, Motorola, Samsung and Ericsson how they feel about Huawei. They're doing exactly the same thing that the Japanese did in the 70's & 80's but with the benefit of being supported by the government.
      What the hell are you talking about?? China is a communist country, there is absolutely no free market!!!
      Don't care for China but these companies you mentioned knew the risks when they went in, it is their own fault when they get screwed. All they can blame is themselves for being greedy b****** drooling over huge market China holds.
    1. hypnopotamus's Avatar
      hypnopotamus -
      I've been living in China for years and still have no clue...weird country, weird people...
    1. 8lias's Avatar
      8lias -
      As long as China feels that they are needed, they'll try to control the ball game. China Mobile, largest mobile network (with that many people, of course it's the largest market). They know every mobile maker would want to strike a deal with them so they play hardball. As long as people still want the iPhone/iPad, Apple has a better chance to play ball with them.

      Sometime, I wish Jobs' still alive, because Jobs can plays ball.
    1. Mohit555's Avatar
      Mohit555 -
      Quote Originally Posted by 8lias View Post
      As long as China feels that they are needed, they'll try to control the ball game. China Mobile, largest mobile network (with that many people, of course it's the largest market). They know every mobile maker would want to strike a deal with them so they play hardball. As long as people still want the iPhone/iPad, Apple has a better chance to play ball with them.

      Sometime, I wish Jobs' still alive, because Jobs can plays ball.
      Jobs wouldve f****d china out of its wits!
    1. PokemonDesigner's Avatar
      PokemonDesigner -
      Quote Originally Posted by xhazex9x View Post
      Good apple deserves this for being such diickheads to everyone including their customers
      Their are people who understand why I hate Fapple as a company!?
    1. jOnGarrett's Avatar
      jOnGarrett -
      Quote Originally Posted by quidam_brujah View Post
      The "Free Market" is a myth -- it doesn't exist. All markets are created and controlled by governments. Unfortunately, unlike the US & Europe, the Chinese 'market' is a joke being played on everyone outside that country. China wants to allow R&D and production into China until local companies can learn how to do it, then it wants to make sure that those local companies become the market leaders. Ask Cisco, Motorola, Samsung and Ericsson how they feel about Huawei. They're doing exactly the same thing that the Japanese did in the 70's & 80's but with the benefit of being supported by the government.
      +1
    1. Jahooba's Avatar
      Jahooba -
      Commies