Author: Thompson Lee
Apple holds its annual event every September at its Silicon Valley campus, where it reveals new product designs. Following this event, millions of Apple products are rolled out to be accessible to users all over the world.
This process repeats itself year after year, and it is how Apple has maintained its position as one of the world’s largest and most profitable corporations.
However, the company appears to have problems in China, and business may not be running as smoothly as planned this year. We’ll review some of the issues and how the company intends to address them.
Apple Faces Production Challenges in China
Due to its reliance on Chinese factories, Apple is more susceptible to supply chain stockpiling. The company stated on Sunday that the recent COVID-19 outbreak in areas near its largest iPhone factories in Beijing would cause a delay in the global shipments of the iPhone 14.
Apple won’t be able to satisfy user demands for the holiday season because the outbreak prompted Chinese authorities to impose a mandatory lockdown.
The problems the company is currently having in China may force them to reassess critical facets of its operations there, including diversifying its manufacturing facilities.
But as things stand, the company would find it challenging to detach itself from China after spending more than 20 years working with manufacturing partners to establish factories backed by a sizable local supplier network.
According to reports, Apple is currently discussing with China’s president to relax the country’s lockdown regulations so the company can meet holiday season demand. But President Xi has made it clear that he won’t be loosening up his zero Covid policy soon.
Apple See a Spike in Profit in China
When it comes to selling its gadgets to Chinese users, the tech giant has seen a surge in business. Apple’s profit increased by approximately 104% over the previous 24 months, reaching roughly $31 billion in the fiscal year ending in September. With these figures, Apple has surpassed most of China’s major corporations, including Alibaba and Tencent.
These record earnings, however, highlight Apple’s agreement with Beijing, which enables them to maneuver president Xi Jinping’s clampdown on national tech groups while taking advantage of US sanctions that hurt its major rival Huawei.
As the US-China relationship deteriorates, Apple may soon become entangled in a web of both countries’ meddling in its business, especially since President Xi Jinping has stated that the country’s top priority is security and other ideological viewpoints rather than economic growth, which has been the country’s main priority for decades.
Apple has worked hard to meet the preferences of its Chinese users and has credited its Chinese users for features such as the QR code scanner, night mode, and even 5G. Despite issues with the Chinese government, the tech titan hopes to strengthen this customer relationship further.
The Bottom Line
Apple is experiencing production and supply issues with its latest iPhone device. One of its major factories in Beijing are currently on lockdown due to the recent COVID-19 outbreak and operating at a reduced capacity. On Sunday, November 6th, 2022, the company announced that it would be unable to meet holiday demands. Despite its positive relationship with the Chinese government and ongoing negotiations, Apple will not be permitted to operate fully.