Apple’s iPhone sales are getting crushed in China. Sales of the smartphone dropped 19% in the first three months of 2024, the worst showing since COVID-19 hit. Meanwhile, sales from the Chinese smartphone maker Huawei surged nearly 70%, according to Counterpoint research.
China remains one of the biggest markets for Apple but the company has been dealing with less friendly territory lately. Multiple state-owned companies and government agencies are instructing employees to use local devices over foreign ones. That has had an increasingly chilly effect on Apple sales.
“I think that Apple’s not the target here, the U.S. is the target, and it’s China flexing its muscles,” said Doug Guthrie, director of China initiatives at Arizona State University’s Thunderbird School of Global Management.
Guthrie worked for Apple in China from 2014 to 2019, advising executives on how to navigate the business environment under President Xi Jinping.
China is Apple’s third-largest market, accounting for nearly 20% of Apple’s total sales. When media outlets reported that Chinese central government workers may be banned from bringing iPhones to work back in September 2023, Apple’s stock fell 4% in one day. Since then, the iPhone restrictions have rippled to other municipalities and state-owned companies.
Guthrie said he doesn’t think China’s government is actually worried about the security of the iPhone. He said the move is part of a response to U.S. actions against China’s Huawei.
“This isn’t a signal to Apple. I think this is a signal to the U.S. and the world,” Guthrie said. “‘We have the most sophisticated manufacturing supply chain in the world and within a decade we’re going to be the largest economy in the world. And so if Janet Yellen wants to come over here and shake her finger at us and say, ‘We don’t really know how to run a market economy;’ we do, and we’re just as good as you.’”
“That’s really the signaling and the message,” he continued. “I think Apple and its sales in China are sort of collateral damage of that.”