China takes lion’s share of Apple’s loss, with 26% decline in sales

27.04.2016 00:14

China takes lion’s share of Apple’s loss, with 26% decline in sales

Everett Rosenfeld |

Apple’s sales in China tumbled in the second quarter after warnings of weakness, the company said in Tuesday’s earnings.

The company reported quarterly earnings and revenue that missed analysts’ expectations, with revenue declining year-over-year in every region. But China saw the biggest share of declines: Greater China sales, once the tech giant’s fastest growing market, fell to $12.49 billion in the second quarter, the company said, a 26 percent year-over-year decline.

“We feel good about China,” Apple CEO Tim Cook told CNBC after the release.

But speaking in January, Cook warned that the company had seen “some signs of economic softness” in the Greater China region.

That business segment, which includes mainland China, Taiwan and Hong Kong, is a key area of growth for the U.S. tech giant, but Cook acknowledged in January that it had been something of a “turbulent environment.” China has seen its pace of economic expansion slowing in recent quarters, and its stock markets have taken investors on a roller coaster ride during that time.

Beyond macroeconomic factors, Apple’s position in China is under fire by domestic firms, and it could even see the government in Beijing crack down on its success in the country.

Speaking with CNBC earlier this week, billionaire Chinese entrepreneur Jia Yueting said Apple is “outdated,” and charged that it has not been innovating at a sufficient pace.

“One of the most important reasons [for slowing sales] is that Apple’s innovation has become extremely slow,” he said. “For example, a month ago Apple launched the iPhone SE. From an industry insider’s perspective, this is a product with a very low level of technology…We think this is something they just shouldn’t have done.”

And Cupertino, California-based Apple could face increased scrutiny from Beijing, which has sought to exercise control over many other U.S. tech companies.

But Cook has continued to sound an optimistic note on China throughout that time.

“Beyond the short-term volatility, we remain very confident about the long-term potential about the China market and the large opportunities ahead of us, and we are maintaining our investment plans,” Cook said in January, adding that he does not “subscribe to the doom and gloom kind of predictions.”

—CNBC’s Anita Balakrishnan and Josh Lipton contributed to this report.


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