28/04/2020
SHANGHAI (Reuters) – Apple Inc’s (AAPL.O) discounts on the iPhone 11 in China and the release of a new low-price SE model have put the company in a better position than rivals to weather a coronavirus-related plunge in global smartphone demand.
While China, which accounts for roughly 15% of Apple’s revenue, appears to be a rare bright spot, investors will be keen to get a picture of global demand when the Cupertino, California-headquartered company reports second-quarter results on Thursday.
The iPhone maker has shut retail stores in the United States and Europe following the COVID-19 outbreak, and China is the only major market where it has been able to reopen all shops.
Consumer spending is expected to be muted as the pandemic has crippled economies and Apple, the world’s second-most valuable tech company, is better armed with the launch of its new price-conscious iPhone model, analysts said.
“Apple is better positioned than most to experience a rapid recovery in a post COVID world,” Evercore analyst Amit Daryanani said in a research note. “We see demand as pushed out, not canceled.”
He added that the launch of the $399 iPhone SE suggested that Apple’s supply chain was getting back on its feet after weeks of shutdown earlier this year.
Analysts expect Apple to report a 6% drop in revenue and an 11% fall in net income in its fiscal second quarter, according to Refinitiv data.
On the other hand, Chinese brands such as Oppo and Vivo who have steadily moved to offer high-end models to challenge iPhones, stand to lose marketshare as bargain hunters choose Apple.
Earlier this month, several online retailers in China slashed prices of the iPhone 11 by as much as 18% – a tactic Apple has used in the past to boost demand. And while initial social media reaction to the new iPhone SE was muted, analysts said they were seeing a pick up in demand.
The cheaper iPhone SE could tempt iPhone owners to opt for a newer device, something they might have otherwise delayed in a weak economy, said Nicole Peng, who tracks the smartphone sector at research firm Canalys.
“People want to avoid uncertainty in a downturn,” she said. “Having a brand like Apple that can showcase quality and make people less worried about breakdowns or after-sales service can bring in buyers.”
CHEAP IS GOOD
Early data suggests that the Chinese smartphone market is recovering rapidly in the aftermath of the virus, and Apple has emerged relatively unscathed.
Sales of iPhones in China jumped 21% last month from a year earlier and more than three fold from February, government data showed, meaning March-quarter sales in the country were likely to have slipped just 1%.
To be sure, a recovery in Chinese demand won’t offset sales lost in the United States and Europe. And the company is yet to launch a smartphone enabled with 5G wireless technology like those offered by Asian rivals, a disadvantage for Apple so far.
But those same expensive 5G models may not sell well in the current climate of frugality, analysts said.
“If there are no massive subsidies (in China), I doubt there will be many smartphone users who will be eager to upgrade to 5G,” said Linda Sui, who tracks the smartphone sector at research firm Strategy Analytics.
Sui expects iPhone shipments in 2020 to be down 2 percentage points at the most, versus double digit declines at Chinese firms.
Apple also has revenue from its services business to fall back on. It has leveraged its large iPhone customer base to boost services revenue from music, apps, gaming and video.
“Apple’s Services segment should remain resilient in today’s work-from-home environment, thereby demonstrating the durability of Apple’s model,” Cowen analyst Krish Sankar said.
Source: Reuters
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26/01/2015
The first group of premium government automobiles to be auctioned off amid the ongoing frugality campaign have gone under the hammer in Beijing.
According to Zonto Auction, the 106 vehicles it sold on Sunday were from six central government departments including the China Insurance Regulatory Commission, China Securities Regulatory Commission and State Bureau for Letters and Calls.
The cars were without plates, which would have to be supplied by the purchasers.
A total of 505 bidders from around the country joined the auction, which brought in proceeds of 6.6 million yuan ($980,000).
The highest bid went to a Toyota cross country vehicle for 200,000 yuan.
Li Guanwen, 40, of Hebei province, bought a Skoda bus for 160,000 yuan.
“The market value of this bus is around 500,000 yuan,” said Li.
“I think the reform of official vehicles is a very good thing and is a very good approach to remind civil servants to cut costs and to serve the public well.”
In November 2013, public agencies were told to cut their vehicle fleets, as well as reduce receptions and overseas trips. The use of all vehicles, except those required for law enforcement, emergency duties and essential public services, were scrapped or severely reduced.
via Govt sells off premium cars[1]- Chinadaily.com.cn.
Posted in China alert, frugality, Internal politics, Politics |
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28/12/2013
Fans of China\’s President Xi Jinping said they were pleasantly surprised after photos of him dining in a popular Beijing steamed bun restaurant went viral.
Pictures, taken and shared by fellow diners, showed a casually-dressed, smiling Xi queuing up at a Qingfeng steamed bun restaurant in the capital. Xi, who appeared to be dining alone, was seen to have placed his own order at the counter, paid for it, and carried his tray before sitting down to enjoy his meal in the room full of people.
Diners, after realising who they were sitting close to, strove for a glimpse of Xi. Many used their phones to record the unusual encounter, which Xi didn\’t seem to mind.
\”Only leaders who care about ordinary guys will do this, and he will win respect and care from his people,\” wrote one blogger.
\”I can\’t believe my eyes – President Xi lined up, paid his own bill, and fetched his own food,\” read a message posted on the official Weibo page of the People\’s Daily.
Others, however, weren\’t so impressed.
\”It\’s just a show and people should stop reacting like they were slaves\” one microblogger wrote .
\”Start thanking him when China has fixed the food safety issues,\” read another comment.
An average meal costs 16 yuan (HK$21) at a Qingfeng steamed bun restaurant, a popular chain store in the Chinese capital, according to restaurant review websties.
via Photos of Xi Jinping eating at a popular Beijing restaurant go viral | South China Morning Post.
Posted in austerity, China alert, frugality, Social & cultural |
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16/09/2013
Austerity and anti-graft comes to the rescue of sharks (whose fins are cut and hence the fish bleed to death).
WSJ: “Hong Kong may be the capital of the world’s shark’s fin trade, but as environmentalists step up their campaign against the delicacy, even this city’s government has declared it off-limits.
Last year, China’s government announced it would stop serving shark’s fin soup at official banquets, a move that was heralded by green groups around the world, though it will likely take years to come into effect. Now, Hong Kong is following suit, banning the dish at official events and requesting civil servants to refrain from eating it at other functions, along with other endangered species such as bluefin tuna and black moss. The move comes as international companies from luxury Shangri-La hotel chain to Cathay Pacific Airways have declared they will refuse to serve or carry most shark’s fin.
Altogether, said Allen To of the World Wildlife Foundation, more than 150 corporations have pledged not to serve the dish—a gelatinous, stringy soup that’s believed to have curative properties—at their own banquets. “But it’s still very common at wedding banquets,” said Mr. To, noting that at local restaurants, it can be more expensive for couples to swap out shark’s fin soup for other luxury dishes such as abalone or bird’s nest soup.”
via Off the Menu: Hong Kong Government Bans Shark’s Fin – China Real Time Report – WSJ.
Posted in austerity, China alert, corruption, Economics, Environment, frugality, Good news, Politics |
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02/09/2013
The Hindu: “Amidst a storm over proposal to shut petrol pumps during night to taper fuel demand, Oil Minister M. Veerappa Moily on Monday said the government had not made any such proposal and the idea had come from public.
“It is not our idea. It is an idea which is coming from public and others. No decision has been taken to keep petrol pumps dry during any part of the day,” he told reporters.
His Ministry plans to launch a massive fuel conservation drive from September 16 to cut fuel demand by 3 per cent and save an estimated Rs. 16,000 crore or $2.5 billion in Forex outgo.
“We are toying with the ideas (on conserving fuel) that have come to us. That doesn’t mean we have accepted them or are enforcing shutdowns,” he said.
Mr. Moily said before the planned launch of September 16 campaign, several proposals to save cut fuel consumptions have come to the government and as per usual practice are being mulled over by his ministry.
“It is incorrect to say that any decision on shutting petrol pumps has been taken,” he added.”
via No decision on shutting petrol pumps at night: Moily – The Hindu.
Posted in austerity, Economics, frugality, India alert |
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12/07/2013
The Chinese public must be very confused. The government is urging them to spend rather than save. Yet, government itself is on a serious austerity drive. See post on the cut back in budget for the National Games – https://chindia-alert.org/2013/07/12/austerity-threatens-to-take-gloss-off-chinas-national-games/.
BusinessWeek: “Twenty-seven-year-old lawyer Kevin Han is frugal. Breakfast is 5 yuan (82¢) for a cup of soybean milk and a hard-boiled egg or a steamed bun. He has a 20-yuan lunch of white rice, with small portions of meat and vegetables, in the cafeteria at his workplace in Beijing. He spends about the same for dinner. Han gets deals buying clothes online, lives in a cheap rental apartment, and takes the subway to work (4 yuan round-trip). Scrimping is a must if he’s to buy his own place. He says he saves about half his monthly take-home pay of 13,000 yuan. “I want to get married and have a child, which will cost lots of money. My parents are not rich. So I have to save everything by myself.”
China’s leaders want these super savers to open their wallets and boost a slowing economy. Chinese on average put away 30.6 percent of their disposable income, amounting to 6.9 trillion yuan in total household savings in China in 2012, estimates Louis Kuijs, chief China economist at Royal Bank of Scotland (RBS) in Hong Kong. That’s up from 23 percent 10 years ago. With increasing overcapacity in steel and cement, rising corporate debt, and a growing problem with unregulated shadow finance, Beijing must wean China off investment-led growth in favor of more household consumption—only 35.7 percent of gross domestic product, way behind the 50 percent to 60 percent in many other countries.
Middle-class Chinese like Han pinch pennies to pay for ever-more costly city apartments and save for their children’s education costs. The working class also hoards yuan. Twenty-six-year-old Sichuan native Wei Yinping, a worker in a Shenzhen watchband factory, worries about paying for medical care if she or her parents become seriously ill. She saves almost half her monthly salary of 2,500 yuan. Without a hukou, or household registration card, she can’t avail herself of Shenzhen’s public health-care network. “If I had a local hukou, I would have many social security benefits” and not save so much, she says. Wei plans eventually to move back home and take care of her mother.
One reason the Chinese are champion savers is that earning a decent return is so hard. China’s central bank has kept rates low: A one-year deposit rate offers 3 percent, while loans to support investment by free-spending local governments and state companies go for 6 percent. With inflation, Chinese households earn close to nothing on bank deposits. “Interest rate policy has limited the ability of households to earn income from their savings, and reduced the pressure on poorly performing companies to improve,” warned Andrew Batson and Joyce Poon, analysts at Beijing-based economic consulting firm GK Dragonomics, in a May report.
The government is taking steps to reform the hukou system. It’s expanding health-care and pension plans so Chinese need not save to protect themselves from catastrophe. Regulators are giving banks more flexibility to set market-based interest rates and encouraging lending to the service sector, which is creating jobs. It will take all this and more to unleash Chinese spending power.”
via China’s Savers Block the Consumer Economy – Businessweek.
Posted in China alert, Economics, frugality, saving |
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CHINDIA ALERT: You'll be living in their world, very soon 