There is one big reason why China won’t ban the Apple iPhone


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The U.S.-China trade war is one of tit for tat. Revenge and retaliation are at the heart of this ever-escalating battle. For example, last week the U.S. raised the tariffs on $250 billion worth of Chinese imports from 10% to 25%. China quickly added tariffs on $60 billion of U.S. exports. Now that the U.S. has put Huawei on the brink, what is to stop the Chinese government from instituting a ban on Apple in the country?

Securities firm Goldman Sachs thought that the idea of a Chinese ban on the iPhone was serious enough to crunch some numbers over. Goldman analysts, while not venturing an opinion on whether China will get revenge for Huawei, decided that such a ban would cost Apple 29% of its 2019 net earnings, or $3.35 a share. Last fiscal year, Apple had net of $59.5 billion so a quick and dirty estimate reveals that an iPhone ban in China could cost Apple more than $17 billion. 

Many don’t expect China to ban the device because such a move could harm China’s economy. After all, Apple pays big bucks to contract manufacturers in the country to assemble the iPhone. In fact, because Apple depends on firms like Foxconn and Pegatron to manufacture its smartphone, the handset is considered an export from China and could be subject to U.S. tariffs in the future. If the iPhone were to be banned in China, Apple would be forced to cut production of the device, which might lead to huge layoffs of Chinese production line workers. With an economy already suffering from the trade war, this is something that the government there would try to avoid.

See also  Updated iOS 13.6.1!


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