Apple took a double whammy beating from China this week. First, China’s censors ordered the closure of Apple’s online book and movie services, and second, weak sales in the Asian giant was partly responsible for the 13 percent decline in Q1 revenues of the iPhone maker.
It was the first decline in 13 years suffered by the Cupertino-based tech giant, noted The Wall Street Journal. Apple’s global revenue went down $7.5 billion to $50.55 billion in the quarter ended March 26 compared to 12 months ago.
Contributing to that decline in the flat growth of Apple’s China market, resulting in revenue from Greater China, including Taiwan and Hong Kong, dipping $4.3 billion to $12.49 billion, in contrast to the 71 percent jump a year ago.
However, Apple CEO Tim Cook said in an investor call on Tuesday that the China market remains strong. He blamed the decline on currency appreciation in Hong Kong since majority of shoppers in the special administrative region are from the mainland. Since more Apple stores have opened in the mainland, more Chinese are buying their gadgets there rather than in Hong Kong.
Nicole Peng, China research director at Canalys, added that the market slowdown in China is also due to consumers waiting for the new iPhone 8 rather than purchasing now an iPhone 6S. She noted that the 6S is not a major upgrade from iPhone 6.
Meanwhile, Apple opened to Bloomberg its factory in Shanghai run by Pegatron Corp. John Sheu, president of the facility which has about 50,000 Chinese workers, toured the Bloomberg reporter. Located at the corner of Shen Jiang and Xiu Yan Roads, the area of the assembly plant for iPhones is about 90 football fields.
The area has a center, the plant’s plaza, which has a firehouse, police outpost and post office. The facility features shuttle buses, large cafeterias, manicured lawns and koi ponds. However, beneath the impressive facilities, The Chicago Tribune cited the China Labor Watch report that basic pay of employees is so low that they need to do overtime.
But a Pegatron official debunked that and said including overtime, the employee’s monthly salary would range from 4,200 to 5,500 yuan ($650-$850). T is about the same cost of an iPhone 6 in China which has a price tag of 4,488 yuan.