Friday 7 August 2020

Apple, Trump and Tik Tok/Wechat

The importance of Apple to US markets is huge. As one of the FAANGS which are 70% of the US market any large impact on its performance will create a downtrend the major US equities market. 

So the Trump administration's latest move to ban TikTok (owned by Chinese company Bytedance) and WeChat (owned by Chinese tech firm Tencent 0700 HK) has some serious issues in the current form. The executive order prohibits US entities from doing any business with TikTok and WeChat or their Chinese owners. 

Now virtually all consumer facing US businesses in China rely on Tencent for advertising and payments....and none is more exposed than Apple.

Approximately 70% of China's retail transactions are done through digital payments in China and of this ~50-60% is through WeChat. Furthermore the contact tracing app (required for entry in most buildings in China) also runs through wechat. So not having wechat in China literally means you cannot go anywhere, you cannot buy anything, cannot chat with anyone, cannot see all your friends social media.

China is Apple's largest market, the country generates ~17% of iPhone sales and probably a higher percentage in Appstore sales. The problem for Apple, as highlighted above, in China an iPhone without wechat is virtually useless.Therefore, in current form, and if Trump follows through and Apple abides by the law, this will literally destroy Apple's business in China and consequently have considerable impact on the markets. 


E-K said...

Well thank God someone's standing up to the CCP.

Trump is only bonkers in the context that Conservatism has been outlawed and he didn't get the memo.

Our own Boris has gone full Corbyn.

How to defeat Labour ?

Adopt all their policies ! The man's a genius !!!

david morris said...

As ever, with Trump, it's all about an initial position when trading. Expect there to be much "discussion" before final settlement.

andrew said...

He probably is not aware of this impact.
Or Looking deeper that may be the idea

Anonymous said...

What's the ultimate cost for chasing Chinese cash (and cheap labour)? What does the world look like in 20 years when China is the largest economy and has the influence the US had for the last 70 years?

When global trading with politically like minded countries (or smaller less influential countries) I can see where the system works. But when you're dealing with a communist country masquerading as (quasi-)capitalist, that doesn't have democracy and 4/5 year election cycles to worry about, they can play a very different strategic game that the West has been blinded to.

The short term profit gained dealing with China has blinded us to the long term pain that will eventually come when CCP has the control and influence they are seeking and are happy to wait 50 years to gain. The stupid thing is China isn't even shy about its ambitions.

We're beginning to see the impact of China's decades long strategic game - they've infiltrated academia, they've gotten control over Hollywood and the media, they has massive control and influence of intergovernmental organisations like the WHO, they have half of the US politicians on both sides of the aisle under their thumb (and probably many here - just look at how Osbourne creamed his pants to be thrown a few quid pocket money from them)

Of course there's going to be pain puling out of China, but the dystopia we currently live in is a small preview of what's to come if don't pull out at all.