While Apple had a nice quarter overall, it continues to lose ground in one of its most important markets — China.
Just two years ago, Greater China was the Silicon Valley company’s fastest-growing region, but last year Apple suddenly saw its Chinese market share fall for the first time ever, and it looks like this year will not be any better.
According to its latest quarterly report, Apple’s revenue in Greater China dropped by 9.5% to $8 billion in the quarter. That’s less than half what the company made there just two years ago. It also makes Greater China the only region where Apple’s sales slipped year-on-year — as they have now for six straight quarters.
After years of dominating the Chinese smartphone market, Apple now appears to be losing out to a slew of low-cost domestic competitors which have grown their businesses by taking liberally from Apple. Meanwhile, these Chinese firms also have much less to worry about in terms of government regulations and interference. Last year, Apple was hit with a number of rather frivolous lawsuits, including one that granted a Chinese company the right to brand its leather products with the label “IPHONE.”
This unfortunate series of events has apparently caused Apple to try its best to get on Chinese officials’ good side. Last summer, Chief Executive Tim Cook paid a visit to Beijing, pledging $1 billion in investment into China’s leading ride-hailing service, Didi Chuxing.
Meanwhile, Apple has also begun to bend to the will of Chinese censors. Earlier this year, it removed the New York Times app from its China App Store at Beijing’s request and just last week it purged foreign VPN apps from the store for violating Chinese law.
To comply with Chinese law, Apple has also announced that it will set up an iCloud data center on the mainland. Additionally, the company has recently appointed its first-ever managing director of Greater China, who will report directly to Cook.
Many are worried about the direction that Apple appears to be heading to save its China sales. However, on Tuesday, Cook defended his company’s decision to remove VPN apps from its app store, saying that part of doing business in a country is following that country’s laws.
“We would obviously rather not remove the apps,” Cook said. “But like we do in other countries we follow the law wherever we do business.”
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