While the company has or is working on first-party and open-source alternatives, there’s little doubt that the so-called Huawei ban will disrupt the company’s business in the short-term — and it could have lasting effects in the long-term.
But the Huawei ban may not just hurt the Chinese OEM. In fact, while it may seem counterintuitive at first, the move may just do indirect but significant damage to Apple and other U.S. technology firms. Here’s how.
What Does Huawei Have to Do with Apple?
Huawei is not just a Chinese smartphone manufacturer — it’s a source of pride for China and its citizens. That’s because it’s one of the few China-based OEMs with a truly international profile.
Additionally, there’s a narrative in Chinese state media that Huawei is a target of U.S. economic warfare. Essentially, the idea is that the U.S. government is using its power to stifle Huawei’s ability to compete in the West, boosting U.S.-based technology firms in the process.
Apple and Huawei, naturally, are smartphone rivals. And amid already rising trade tensions between the U.S. and China, banning Huawei is not a good look. In other words, it has invited backlash from China. It’s even been reported that Chinese citizens now believe owning an iPhone is “embarrassing.”
While the sentiment in China may not strictly be anti-Apple, Apple’s products have been the target of protests and boycotts in China before. It’s very like that those boycotts are only going to get worse as Chinese companies and citizens ditch U.S.-made products in favor of locally produced ones. Apple, essentially, could end up as collateral damage.
Why China Is Important to Apple
China is the largest smartphone market in the world. That means it’s an important region for any smartphone manufacturer — particularly in a declining smartphone market. Just consider that weak sales in China were one of the primary factors behind Apple’s rare revenue guidance revision earlier this year.
While only 17 percent of Apple’s revenues are generated within Greater China, the country is important to Apple’s long-term success. The Cupertino tech giant can probably survive a short-term drop in sales, but brand damage in China is probably going to have a major impact to Apple’s bottom line in the long-term.
That’s not even counting the possibility that the Chinese government could retaliate and ban critical Apple suppliers, like Foxconn, from doing business with the U.S. company.
Apple’s supply chain in China is absolutely critical to the company’s business. Re-establishing that kind of supply chain somewhere else would be a monumental feat in the long term — and absolutely impossible task in the short term.
What Can Apple Do About It?
Arguably the worst part about the issue for Apple is that the company can’t really do much to stop it. While price cuts and other consumer-facing incentives have helped Apple’s growth in China, those strategies are aimed at dealing with Apple’s price problem in the region. They’re unlikely to do much to break a boycott.
Short of negotiations with the Trump Administration, Apple doesn’t have the power to rectify Huawei’s situation or the U.S.’s increasingly strained relationship with China. There’s not much it can do to save its reputation from indirect damage. Yes, the Huawei ban is bad for Huawei. But it also spells trouble for Apple and the entire U.S. tech community, too.
This article was originally posted here