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Fears Of Chinese Slowdown Affecting Apple Are Grossly Misplaced

|Includes: Apple Inc. (AAPL)

China has devalued the yuan by 1.9 % and that, the self proclaimed pundits on cnbc & bloomberg declare, means the market & unit volumes for Apple products, particularly iphones are going into a tailspin as the consumer will be priced out.


Here's why not:

1)Before iphones are a US export to China (that are hurt by the weaker yuan), they are, in fact, a Chinese assembly/manufacture. Indeed, the visiting (to the US) Chinese premier once discussed this in detail.

The bill/invoice for assembly to Apple will drop with the yuan devaluation; as has the costs for the parts sourced from around the world as the US dollar strengthened against virtually every currency or remained firm.

2)China incomes growing faster than local CPI (1.6% annualized) fed by a growth of GDP at 5-7% .

3)Apple has been doing business internationally for years and has adjusted prices in local terms AND continued to grow sales even as the dollar has surged.

4)If Apple does not adjust local pricing in China they will actually benefit on increased margin which is now a corporate average of 40%.

5)Readers may not need to be reminded how wrong the biz press was when they predicted the 5s would be a flop in China & the cheaper 5c would prevail because the poor Chinese could not afford!

How wrong they turned out to be post release!

But old habits die hard.

A year later, in 2014, the same veteran reporters on CNBC & Bloomberg again warned that the $100 price increase on iphone 6 plus would surely kill it for the poor Chinese folks (maybe the 6 would outsell the plus; then they threw in bendgate for added measure)!

How wrong were they again!


This makes the third time CNBC & Bloomberg reporters are crying wolf, stereotyping Chinese customers of iphones !

Disclosure: I am/we are long AAPL.