Stock price? China’s economy is so large and so intertwined with economies elsewhere in the world, including Apple, that a hiccup or burp in the news emanating from China ripples across the ocean, impacting stock markets along the way. Is Apple immune? Can Apple be infected by a Chinese malaise?
The answer to both questions is different. Is Apple immune from disruptions in the Chinese economy? No. Can Apple be infected by ripples from China which impact other economies? Yes.
No. And yes. Perhaps more appropriate is the answer ‘not that much.’ Apple isn’t as affected, or infected, as other companies, and Apple’s immunity is stronger than other technology companies.
Why? And how so?
Apple is a premium brand which manufactures affordable luxuries. In times of economic distress, savvy customers look for value, dependability, and security, and Apple’s iPhone delivers that more than Samsung or other Android-based mobile devices.
Just using the iPhone as an example of how Apple seems to have weathered all storms, the sales numbers– worldwide– and in China seem to indicate the company is well insulated (inoculated) against economic ripples. In Q1 of every year since the iPhone launched, going back to 2008, Apple has sold more iPhones. While the rate of growth has slowed down, that’s to be expected as the smartphone market grows and matures.
Apple announced in the last earnings period that sales of iPhone in China were up over 100-percent. In a rare moment, CEO Tim Cook let it be known that Apple’s business in China has never been better, and seems to be accelerating. That little tidbit of information helped AAPL to weather the current stock market crisis, which, it seems, is China based.
Economically, what happens in China, affects the rest of the world. But Apple? Not so much. For Apple, what happens in China, stays in China. Helping to damper the ripples Apple has another 40 stores planned for China through the next year which will help bolster sales. China’s economy is growing slower that impacts a highly emotion stock market, but even projected slower growth remains roughly three times that of the U.S. economy; you know, the one where Apple sells more smartphones than anyone else.
These are economic storms Apple has weathered before because Apple’s products are premium brands which appeal to upscale customers (or, average people who want a little something from the upscale world; which Apple gladly provides) regardless of economic distress.
Apple’s new best friend forever is China and sometime in the next year Apple will cross a threshold whereby more revenue and profits come from China than any other country. But the economic ripples emanating from China don’t have much impact on Apple.