Competition from domestic players
According to Counterpoint Research, Apple’s (AAPL) iPhone accounted for 10.8% of the total Chinese (FXI) smartphone market in May 2016, as compared to 12% one year previously. Apple has been facing competition from domestic heavyweights such as Huawei, Vivo, Oppo, and Xiaomi—the top four smartphone manufacturers in China, which have a market share totaling more than 53%. Specifically, Huawei accounts for 17.3% of the market, while Oppo almost doubled its share YoY (year-over-year) to 11%.
China is a huge market for Apple, of course. The country generates almost 25% of revenues for the technology (QQQ) heavyweight. The Americas, by comparison, accounted for 38% of Apple’s revenues in fiscal 2Q16.
Apple invests heavily in China
Apple opened seven retail stores last quarter, reaching a total of 35. Apple planned to open another five stores in fiscal 2Q16. But earlier in 2016, billionaire investor Carl Icahn exited his investment in Apple. He based his decision on increasing concerns about China and suggested that China’s weakness is already hampering the stock’s price performance and could continue to affect it in the future.
Icahn had previously viewed Apple as undervalued. In 2015, he gave the stock a price target of $240. Later that year, Icahn started selling off shares of the company, retaining only 45.8 million shares at the end of 2015. By April 2016, Icahn had sold all his Apple shares over concerns about China.
Continue to the next part for a look at Apple in India.