China Trade War Accelerates Importance Of India To Apple

The problems Apple faces in China are well covered. The company is particularly severely affected both for its sales in China and for its manufacturing there.

This scenario has been a long time coming. In my article in May last year I speculated that Tim Cook needed to move more quickly in India. The reliance on China was getting too great with a protectionist president and advisers who see China as a threat to the US.

No doubt Tim Cook has been aware of the risks. Starting new initiatives in India is tough, not least because of cloying bureaucracy and rampant corruption. There’s also a difficult and complex “Make in India” policy. However, there are signs that activity in India could pick up rapidly for Apple now. The initial impact would be on manufacturing rather than sales. Important announcements may be pending. If this comes about it would be a bullish signal for the stock price.

Asia

My article in April centered around the Q1 2018 results of Apple. Though found disappointing by some analysts, they showed Apple’s continued strong growth around Asia. 32% of new sales are from Asia. I first wrote about the importance of Asia, and in particular China, in 2014. Then a lot of responses from readers was that it was unrealistic to think expensive Apple products could sell in countries like China. Now all the talk is that Apple is over-reliant on sales in China!

There’s likely to be an increasing consumer boycott of Apple products in China as a reaction to the Trump Administration’s attack on the country and on Huawei.

Apple has other excellent markets in Asia, especially in Japan where it has the highest market share anywhere in the world. As per the 10-Q from Apple, net sales in the six months to end-March were as follows.―NASDAQ