If you are aware of ongoing US-China tension, it’s not surprising that both countries are trying to one-up each others’ moves. After closing each other’s embassies, we are moving onto the next level – banning products. Recently, President Trump announced he is banning WeChat in the US.
Despite its small market presence in the country, the decision can affect American tech giant Apple in its foreign market of China.
The possible reason behind this business loss for Apple is Tencent, which is a parent company of WeChat. The executive order of banning WeChat can not only influence Apple’s but the entire industry’s performance also.
Tencent is a tech giant from China which has invested in several US companies like Riot Games. Apple has a massive customer base in China. If Apple removes WeChat from its ecosystem, that will lead to negative impact in business in China.
Besides, if suppliers and manufacturers from China take an offensive stand that can impact Apple’s future. WeChat is usually compared with its rivals like Facebook’s Messenger and WhatsApp, which are merely useful for texting.
With WeChat you can read news, catch a taxi ride, or pay for anything. Buying an iPhone without WeChat in China wouldn’t be a good choice for an average Chinese consumer.
Apple’s locked-down platform doesn’t allow users to install WeChat without approval from Apple. If that was the case, users can still use iPhones. However, that wouldn’t be an ideal deal for Apple. It’s a catch-22 situation for them.
The elephant in the room is the ongoing trade war between the US and China. If the feud continues, it can turn dramatically ugly for many American businesses that are relying on China. Foxconn plays an important role in Apple’s product manufacturing process.
Recently, when factories of Foxconn in China were shut down due to lockdown, it led to delay in the launch of new iPhone 12.
Apple is trying to become less dependent on China for its manufacturing, like India is trying to emerge as a next manufacturing hub for the world, but it is yet to achieve that level of production which is essential of American industries.
You can imagine how ugly this trade war can turn out to be for Apple if necessary steps aren’t taken by management to dodge the incoming storm.