According to foreign media The Verge, President Trump’s executive order to ban WeChat may have a profound impact on almost the entire technology industry.
This is mainly due to the fact that the parent company of the application, Tencent, has a strong influence on leading companies. And the investment of other American brands, this ban will also have a great impact on Apple, which is deeply rooted in China.
Apple has an important Chinese user base, and almost all of its key manufacturing and assembly partners are in China. Trump’s ban may not only force Apple to delete WeChat from its app store, which will destroy Apple’s smartphone business in China, but it may also change the way Apple manufactures and sells new products in the future .
It is difficult for other apps to compete with WeChat’s influence in China. As analyst Ben Thompson said in 2017, “There is nothing comparable to it in any other country, not even Facebook. All of this It’s all about communication or wasting time. WeChat is like that, but it’s also used to read news, to call a taxi, to pay for lunch (trying to pay for lunch with cash, you’ll look like a fool), to get Government resources are used for business. For all intents and purposes, WeChat is your mobile phone, and in China to a greater extent than other places, your mobile phone is everything.”
For the hundreds of millions of Chinese users who rely on WeChat services, the iPhone without WeChat is actually not a mobile phone at all . Apple’s entire iPhone business model relies on these users. If Apple is unable to provide WeChat services on the iPhone because of Trump’s ban, its China business will almost certainly evaporate overnight.
Because of its more closed platform, Apple has fallen into a self-made trap here. If iOS is a more open system, like Google’s Android system, it can allow users to install WeChat without Apple’s explicit approval, so that at least Chinese users can still use their iPhones, but due to the nature of the iOS system, this The situation is not true.
The WeChat/Tencent ban may have a more dramatic impact on Apple, because it will escalate the ongoing conflict between the United States and China, which has been involved in trade disputes for many years. Apple has begun to feel the initial impact: a 25% tariff on five parts of its Mac Pro desktop; a 10% tariff on its charger, HomePod, AirPods and Apple Watch.
Apple cannot outsource manufacturing to anywhere else in the world. Chief Operating Officer Tim Cook led a transition to “just-in-time” in 2005, reducing excess inventory , And continue to introduce new products. As a result, today’s Apple is almost entirely dependent on Chinese manufacturers like Foxconn. This is so important to Apple that when the factory began to close due to COVID-19, it caused a shock in Apple’s entire supply chain, and may even cause the delay of the upcoming iPhone 12 series this fall.
Although Apple’s recent developments in India have attempted to reduce the need to manufacture all hardware entirely in China, this is only a drop in the bucket compared to what Apple makes in China.
In addition, if China further escalates the trade war in retaliation, Apple will not only not be eased from the upcoming tariffs, but may be forced to bear the cost of all tariffs or face higher import taxes.
It is self-evident how important China’s business is to Apple. As the Economist pointed out earlier this year, Apple made a total of 44 billion US dollars in China last year, more than any other American company. China is already the third largest contributor to Apple’s earnings. In the company’s most recent third quarter 2020 financial report, China’s revenue accounted for approximately 15% of the company’s revenue. Unlike Europe or the United States, Apple’s iPhone and Mac market share has basically stagnated. For Apple, China still has huge growth potential.
It’s not just iPhone sales. IT Home learned that in April, Chinese customers spent US$1.53 billion on App Store purchases alone. This figure does not even include Apple’s revenue from other services (such as iCloud or Apple Music subscriptions), which is Apple’s continued business strategy The key part.
In recent years, with the slowdown in mobile phone sales, it has been difficult for Apple to maintain this growth in China.
Most of Apple’s paid services, such as iTunes Store, Apple Books, Apple TV Plus, Apple Arcade, Apple News Plus, and Apple Card, are also not available in China. This is a big problem for Apple, because Apple has begun to align with regular subscriptions to make up for the stable saturation of the iPhone market.
Apple’s success under the leadership of Tim Cook is largely based on the expansion of the Chinese market, which is both a manufacturing center and an important customer base. Trump’s WeChat ban may hit this once-solid foundation, potentially crushing one of Apple’s largest customer bastions, and its ability to manufacture almost any product.
Even if all this is calm, this is a clear reminder of Apple’s dependence on China.
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