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In April last year, Apple opened its first retail store in India, and Cook personally traveled to Mumbai, and the scene was very lively. A large number of foundries have also increased their investment in India, which brings people optimistic expectations about Apple's prospects in the Indian market. However, this is not the case. At the beginning of 2024, Apple's stock price began to soar and lost its position as the world's largest market capitalization. Microsoft, on the other hand, will start with 2 after 6% in 2023The $99 trillion market cap has regained its top position. Investment banks such as Barclays have downgraded Apple's rating and said that Apple's stock price will remain in the coming year. These stock price fluctuations reflect market expectations, but why is the market so optimistic about Apple's prospects as it overtook Samsung to become the world's most smartphone shipment brand in 2023?
In addition to the challenges in the Indian market, Apple is also facing competitive pressure in other markets. The strong pursuit of Chinese brands such as Huawei and Xiaomi in the field of smartphones has a greater impact on consumers with low brand sensitivity. However, Apple's decades of operation in the Chinese market have cultivated a group of loyal fans, and their feelings for Apple products are almost unshakable like the feelings of the fan circle for idols. However, instead of cherishing these Chinese fans, Apple has shifted its production capacity to India. This has left Chinese consumers dissatisfied when buying a new phone.
Apple's mobile phone sales in the Chinese market are gradually declining, which is the result of a combination of factors. The strong rise of domestic brands such as Huawei and Xiaomi has inevitably affected market share. Although Apple still maintains its leading position in the Chinese mainland market, in the fourth quarter of 2023, Apple is the only brand in the top three to experience negative growth. In comparison, Huawei phones have a growth rate of nearly 80%, and Xiaomi has also increased the number of activations by almost 40%. In addition, the five Chinese brands after Apple have all exceeded 10 million activations, forming a situation of competing for the best. And after entering 2024, Apple's situation is even less optimistic, **iPhone sales are not good. In order to boost sales, almost all products on Apple's official website have seen price cuts, including the iPhone 15 with a drop of as much as 14%. Although this price reduction strategy will stimulate consumption to a certain extent, it is also easy to hurt the hearts of loyal users, especially for those who are the first to buy at the original price.
Apple's sales strategy in the Chinese market has been very successful. Since the second quarter of last year, the Chinese mainland market has surpassed the United States to become Apple's largest market. However, due to the increasing competition in the Chinese market, Apple has had to rethink and adjust its marketing strategy. However, it remains to be seen whether the "relocation" strategy is the only reason for Apple's failure in the Chinese market.
Apple's choice to shift production capacity to India is based on optimism about the huge potential of the market. India, as the second most populous country in the world, has huge consumption potential. Apple wants to improve its profit margins by reducing production costs and wants to gain a larger market share in India. The Tata Group, India's largest consortium, has shown great enthusiasm for its partnership with Apple. Not only is the group willing to start from the ground up and contract Apple's shell parts, but it is also helping Apple open stores in India through its retail company, Infiniti. This kind of cooperation is undoubtedly an ideal choice for Apple. However, Foxconn, a subsidiary of Hon Hai Group, did not realize this in time and continued to invest in India with the mentality of chasing production capacity. However, of all orders for the iPhone 15 series, Apple only gave 27% of the orders to Foxconn, gradually weakening its position in the market.
While labor costs in India are relatively low, there are management costs, communication costs, and logistics costs. In addition, in India's so-called "consumer market of 1.4 billion people", not many consumers can afford to buy an iPhone. As a result, it is uncertain whether Apple will gain a competitive advantage in the Indian market. Apple's decision to shift production capacity to India has long foreshadowed the decline in sales in China.
Apple's strategic layout in recent years has aroused doubts and criticism from the market. Despite Apple's declining sales in China, the shift to India is not necessarily a good return. Apple's initially successful marketing strategy earned it a loyal fan base, but these loyal users were not greatly valued. Apple has chosen to shift its production capacity to the Indian market, both to reduce production costs and to increase market share through the potential of the Indian market. However, the Indian market still faces many challenges, which require Apple to make more adjustments and innovations in its market strategy and product positioning. Ultimately, Apple's outlook in the Indian market remains uncertain, and market reactions and sales data need to be watched continuously.
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