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RT — Apple iPhone sales look $9bn worse than expected, CEO blames China & cheap batteries

Summary:
I am not so sure that the "slowdown" of the Chinese economy is the chief factor in Apple's declining sales there. In the first place, I predicted the strong possibility of Chinese consumers voluntarily boycotting American products, Apple in particular, whereas in the past, American was a status symbol and American products commanded a premium. The Chinese people are very nationalistic, and they are extremely sensitive to perceived "humiliation,"especially by the West considering the history, about which Chinese are much more informed than Westerners. The former goodwill that American companies enjoyed in China is likely to evaporate and even reverse in a way that is not recoverable once new cultural patterns get established.  The CIA calls such unintended consequence of operations,

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I am not so sure that the "slowdown" of the Chinese economy is the chief factor in Apple's declining sales there. In the first place, I predicted the strong possibility of Chinese consumers voluntarily boycotting American products, Apple in particular, whereas in the past, American was a status symbol and American products commanded a premium.

The Chinese people are very nationalistic, and they are extremely sensitive to perceived "humiliation,"especially by the West considering the history, about which Chinese are much more informed than Westerners. The former goodwill that American companies enjoyed in China is likely to evaporate and even reverse in a way that is not recoverable once new cultural patterns get established. 

The CIA calls such unintended consequence of operations, "blowback." This may have been unintended but it was entirely forseeable and US companies lobbied their government to avoid it — unsuccessfully.

Secondly, the difference between Chinese electronics and Apple electronics has largely closed and Chinese product are much less expensive. Apple will likely have to cut prices to compete in emerging markets or see its appeal limited to the luxury market as Veblen goods.

RT
Apple iPhone sales look $9bn worse than expected, CEO blames China & cheap batteries

Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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