Bottom line: An upcoming China trip by Apple’s CEO looks hastily arranged and aimed at damage control after several recent setbacks, but won’t stem the company’s recent sales plunge due to intense competition from domestic brands like Huawei.
Apple CEO books hasty trip to China
As the latest China setback for Apple (Nasdaq: AAPL) ripples through the headlines, the global tech giant’s CEO Tim Cook is booking a trip to Beijing to try and halt a growing tide of bad news that has already wiped billions of dollars from his company’s stock. The latest China setback for Apple looks relatively minor, and has local media reporting recent malfunctions and the disappearance of some apps from the company’s China app store.
Those quirks may be an extension of a growing clash between Apple and China’s censors, who a couple of weeks ago shut down the company’s online book and movie services for unspecified violations. (previous post) Since then, Apple has also suffered negative publicity in China after losing a trademark battle involving the iPhone name, and most importantly from a 26 percent plunge in China sales during its latest quarterly report. (previous post) Read Full Post…
Bottom line: The 5 percent drop in China smartphone sales during the first quarter reflects the market’s current state of saturation, which will lead to more bankruptcies this year for suppliers and second-tier brands.
Xiaomi slips to third in China smartphone market
New data from China are shining a spotlight on the sudden slipping of global giant Apple (Nasdaq: AAPL) in the world’s largest smartphone market, as well as the slower decline of homegrown challenger Xiaomi. At the same time, the 5 percent decline in first-quarter shipments in the huge but intensely competitive China market bodes poorly for everyone. That includes a growing number of suppliers to the big brands like contract manufacturing giant FIH Mobile (HKEx: 2038), which has just warned that its profits are coming under intense pressure.
Much has been written about the effects that intense competition are having on Chinese smartphone brands, many of which are either barely profitable or are even losing money. But the toll has been even bigger on many of their suppliers like FIH, which makes phones for the likes of Xioami and Sony (Tokyo: 6758) and are coming under even bigger pressure due to slowing orders and cries from their customers for lower prices. Read Full Post…
Bottom line: Apple’s new loss in a China trademark dispute marks a minor setback, but is more symbolically significant as the latest in a sudden series of negative developments for the company in its second largest market.
Apple loses China trademark dispute
After a relatively long winning streak in China, Apple’s (Nasdaq: AAPL) fortunes are suddenly looking much less certain in its second largest market. First the tech giant posted a big drop in quarterly China sales during its latest reporting quarter, and now it has just lost a trademark dispute with a local company over use of its iPhone brand.
This latest setback doesn’t look that big for Apple in terms of money, since the winner in the dispute is a leather goods maker that will presumably use the iPhone trademark on products like wallets and clothing. But the loss is symbolic for a global giant that until just a few weeks ago was riding high in China on the back of a string of positive developments and media coverage. Read Full Post…
Bottom line: Apple’s sudden loss of China market share to domestic rivals Huawei, Oppo and Vivo is a wake-up call that the tech giant needs to find new cutting-edge product areas to replace rapidly commoditizing smartphones.
Apple under pressure from China brands
The latest message for Apple (Nasdaq: AAPL) is coming in loud and clear from China, saying the company needs to find the next big thing if it wants to retain its crown as a global high-tech leader. That message has been playing out from numerous sources throughout this week, starting with Apple’s own latest financial results that showed its sales plummeted in China in the first quarter of this year.
That report was quickly followed by a flurry of new data from various research houses, all showing that Apple was rapidly losing China market share to homegrown up-and-comers like Huawei, as well as a recently rising duo of Oppo and Vivo. Adding insult to the injury was the disclosure by billionaire investor Carl Icahn that he recently dumped his Apple shares over concerns about the company’s eroding position in China. Read Full Post…
Bottom line: Lenovo’s new emphasis on its year-old Zuk smartphone brand and TCL’s plunging sales reflect ongoing cutthroat competition in China, though neither company is likely to give up the domestic market anytime soon.
Lenovo launches new Zuk phone
New headlines surrounding 2 of China’s bigger stumbling smartphone makers reflect the market’s current state of chaos, as more than a dozen well-funded brands battle for surpremacy. Leading the headlines is PC titan Lenovo (HKEx: 992), which has decided to bring its young Zuk smartphone brand back into the parent company after initially letting it operate independently.
At the same time, faded giant TCL (HKEx: 2618) has just reported worrisome quarterly results that show its China smartphone sales plunged by more than half due to the market’s fierce competition. Both Lenovo and TCL are rapidly becoming victims in China’s bloody smartphone wars, though each is unlikely to withdraw from the market anytime soon due to strong backing from a cash-rich parent. Read Full Post…
It seems that all the goodwill in China garnered by Apple (Nasdaq: AAPL) CEO Tim Cook wasn’t enough to prevent the company from hitting a major new roadblock, with word that its book and movie services have been blocked in the country. The move nicely illustrates 2 faces of Beijing that sometimes seem contradictory. On the one hand, Chinese leaders crave the attention they get when global leaders like Cook visit China and pay due respect to the market. But on the other, they have little tolerance for anyone who violates the country’s strict censorship rules.
Buzz is now centering on whether Apple will be able to somehow bring its book and movie services into compliance with new Chinese rules rolled out last month, allowing the services to resume. If this were Google(Nasdaq: GOOG) running into similar problems, I would say the answer would be “no”, since the company has little goodwill with Beijing. But Apple has invested heavily to win the favor of Beijing leaders, meaning it’s likely to get a more sympathetic ear, probably after personal intervention by Cook himself. Read Full Post…
Bottom line: Overheating complaints surrounding its new Mi 5 smartphone are the latest technical snafu for Xiaomi, whose image as a cool and cutting-edge company will suffer further as a result of the problem.
Users complain of Mi 5 overheating
Xiaomi is hot once again, but not in a way the former smartphone superstar would probably like. That’s because the latest heat around Xiaomi comes from reports saying a growing tide of users are complaining about overheating batteries in the company’s latest smartphone, the Mi 5.
It’s a bit unclear how widespread this problem really is, and I’ll admit that reports in the Chinese and western media still aren’t that numerous. But there definitely appears to be a problem. That comes as the latest setback for a company that used to grab headlines with its slick marketing gimmicks, but lately has become a media whipping boy for its steady stream of snafus and missteps. Read Full Post…
Bottom line: Yum may sell control of its China unit to Chinese partners in a bid to become more local, while ZTE’s plans for a Nubia IPO reflect a growing emphasis on its younger, trendier smartphone brand.
China set to take control of local KFC?
A couple of big IPO stories are rippling through the headlines, led by word that an investor group headed by China’s sovereign wealth fund could buy control of the China unit of Yum Brands (NYSE: YUM), owner of the KFC fast-food chain, as it gets set for a spin-off and separate listing. This particular news marks a shift from previous reports that implied Yum would retain control of its China unit, even as it sold a major stake to big institutional investors.
While the Yum listing is likely to come later this year, another smaller but interesting deal has telecoms giant ZTE (HKEx: 763; Shenzhen: 00063) saying it plans to spin off and separately list its smartphone division that manufactures under the Nubia brand in the next 3 years. That hints that ZTE may be re-thinking its smartphone business, and perhaps preparing to slowly de-emphasize its older ZTE-branded phones in favor of its younger, higher-end Nubia line. Read Full Post…
Bottom line: Google’s event to promote entrepreneurs in China is its latest effort to curry favor with Beijing, and could help it win permission to open a local version of its Google Play app store by year-end.
Google supports China entrepreneurs
Internet giant Google (Nasdaq: GOOG) is quickly joining Facebook (Nasdaq: FB) as one of China’s biggest fans, as it looks to re-enter the world’s largest online market with a launch of its app store and possibly its Nexus smartphones. Less than a month after its AlphaGo computer wowed Chinese audiences by beating a world champion at the ancient board game of Go, Google’s China chief has just wrapped up a major local event aimed at helping the country’s legions of budding entrepreneurs.
Anyhow who lives in China knows that words like “entrepreneur” and “creativity” have become buzzwords from Beijing and local governments, which are desperately trying to boost the private sector to offset numerous problems in the big state-run establishment. Google’s event looks highly designed to play to that campaign and curry favor with central leaders as part of its broader ambitions to re-enter the market. Read Full Post…
Bottom line: Positive buzz in China bodes well for Huawei’s latest higher-end model, the P9, which could help the company meet its target of selling 10 million of the smartphones and continue its positive momentum.
Huawei launches P9 in China
A week after unveiling its new mid-range smartphone at an event in London, the fast-rising Huawei has launched the P9 at an event here in China that is drawing strong interest from media and fans attracted by its high-end camera. I visited a Huawei shop over the weekend on the popular Nanjing Road pedestrian street here in Shanghai, and was quite surprised to see large crowds checking out the new model.
Of course the crowds were even larger at the much bigger Apple (Nasdaq: AAPL) store just down the street, even though it’s been a month since Apple launched its latest model, the small-screen iPhone SE. But the fact that Huawei could draw big crowds at all testifies to the company’s recent growing momentum, as it looks to overtake Apple and Samsung (Seoul: 005930) to become the world’s largest smartphone brand. Read Full Post…
Bottom line: Lenovo’s decision to tweak the Motorola name is a desperate move to revive the brand, and only postpones an inevitable write-off the company will need to make for the failed acquisition.
Lenovo tweaks Motorola name
In a move that smells of desperation, struggling smartphone maker Lenovo (HEx: 992) has decided to tweak its Motorola brand name whose sales have tanked since being acquired by the Chinese company in 2014. The move will see Lenovo retire the formal Motorola name and simply refer to the brand by its shorter and trendier Moto moniker. More precisely, the brand will become known as Moto by Lenovo.
This particular move isn’t so significant from a financial perspective, since Lenovo isn’t ready yet to ditch the iconic but faded US brand it acquired for nearly $3 billion in 2014. But the reality is that Motorola lost its trend-setting image long ago, and Lenovo’s attempts to reclaim the brand’s luminary past have been a resounding failure. Read Full Post…
