No U.S. company is more exposed to China and tariffs than Apple Inc. (NASDAQ: AAPL).
The media elite's favorite tech company depends on China for both revenue and production.
Almost half of all iPhones are manufactured in just one Chinese city Zhengzhou,The China Daily pointed out. Since the iPhone is Apple's signature product and main cash cow, tariffs like those proposed by President Donald J. Trump (R-New York) present a real threat.
Apple sold 77.3 million iPhones worth $61.6 billion (£52.63 billion) in 4th Quarter 2018, The South China Morning Post reported. Such figures explain why how just the threat of tariffs can cause Apple's share price to drop.
China Owns Apple and that's Good for Apple Shareholders
Revenues might be a greater threat to Apple than production which theoretically be moved. Apple generated $13.02 billion (€11.12 billion) in revenue from Greater China; the People's Republic, Taiwan, and Hong Kong, in 1st Quarter 2018, Statista reported.
Greater China is Apple's third most important market behind the Americas ($24.84 billion or €21.22 billion) in revenues in Quarter 1) and Europe ($13.85 billion or €11.83 billion in revenues in 1st Quarter). The great danger is that China is the engine driving Apple's revenue growth.
iPhones made up one third of the smartphones in China in 2017, Newzoo reported. Apple products accounted for 11% of the smartphone sales in China in 2017.
Such figures why Tim Cook shows much interest in China he knows that Apple Inc. would not survive without that country. Chinese buyers are responsible for much of the 11% revenue increase at Apple in 2017.
Apple's future business plan depends on selling more expensive gadgets like iPads to China's fast growing middle class. The number of middle class people in China is expected to grow from around 430 million today, to 780 million by around 2025 (just seven years from now), Foreign Policy reported. That means there are lot of potential iPad, Mac, iPod, and iPhone buyers in the People's Republic.
This partially explains the growth in iPad sales which expanded by 6% in 2017. Apple CFO Luca Maestri estimated that "new and switching users made up over 70 per cent of all iPad sales" in the Greater China market in 4th" Quarter 2018, The South China Morning Post reported.