International Trade of Apple: Present Status and Future Prognosis

Did you know that Apple employs more people than a good-sized city, which is over 90,000 people? And if Apple was a country, it would be the world’s 27th largest country which is located between Venezuela and Belgium? And the company is so successful that it has twice the amount of money compared to the U.S. Treasury? (Ward 2009). Based on these facts, we can say that Apple is company and a force to be reckoned with. Apple did well in its home turf, which is also coincidentally one of the most highly paid income and profitable markets in the world for mobile phones however, the Californian giant couldn’t best other Chinese smartphone companies like Huawei, Samsung, Oppo, OnePlus and Xiaomi when it comes to sales in emerging economies where incomes are lower like in the Southeast Asian regions (Sohail 2018). Hence, the blog title above. This blog entry writes about how International Business relates to Apple, socio-political issues, trends in international trade, implications, policy issues and finally the conclusion.

According to International Relations EDU, international business happens in a number of ways. To name a few, such as the movement of goods from a country to another or in other words import, export and trade, contractual agreements like licensing and franchising which grants access to foreign firms to use products, services from other nations and research and development, formation and operations of sales, manufacturing as well as distribution facilities in foreign markets. In the case of Apple, globalization plays a significant role in their supply chain. Just like other major companies, the Californian giant does not manufacture all of its own parts in the US but instead some of its parts comes from its competitors like Samsung. Apple is able to continuously globalize because their technology is constantly improving and developing at a mind-boggling rate. Furthermore, Apple is also best at grabbing opportunities in the global market. An example would be between Apple and China Mobile. The Californian giant and the world’s largest mobile carrier have worked more than six years together, working on an iPhone distribution agreement which promises to collaborate with the iPhone 5C. In return, cooperating with the world’s largest mobile carrier would make Apple revenue grow rapidly and will gain more advantage in the global market (Dewitt 2013). In addition, Taiwanese firm, Foxconn, which is Apple biggest customer, assembles Apple’s iPhone in China (The Star Online 2018). From this, we can see that Apple relies heavily on Asian suppliers (Kharpal 2018). To make it clear, Apple doesn’t really make the iPhone. So why does the world’s first trillion-dollar company face problems in China and beyond? When it comes to price-conscious, Chinese consumers are extremely sensitive and there is little to no brand loyalty. This cause problems for iPhones which has and already is expensive to compete with other feature-packed smartphones which are competitively priced (McCaskill 2019) and could not penetrate the market in regions where per capita incomes are low even when the overall economies are growing like Southeast Asia and India.

According to Gandhi, lots of American companies fails in India due to being afraid of getting on a plane and getting their hands dirty. Gandhi quoted, “If you have a bad attitude going in, you have already lost the battle. Success in different parts takes perseverance and unwavering drive. Setting up an Indian operation is messy and can be very hard”. To remake and restore their China experience, more and more number of American companies are turning to India as profitability, interest and grip on the Chinese markets appears to stumble. In the hope of reigniting the spark that what seems to be diminishing in China, the world’s most valuable company, Apple, is pursuing its way to India. Large global and multinational companies like Starbucks, Amazon, Uber and more are also coursing its businesses to India. The reason why foreign businesses are eager to turn to India its because of its ideal demographics that puts the country in a sweet spot. Although it may seem that there is little to no doubt about India’s growth opportunities, they are dispersed over inconsistent regulations, barriers, courses of unseen rules as well as extremely entrenched corruptions. One of the greatest drawback of India’s attractiveness as a place to do business is its ceaseless corruption. Firms that has experienced and felt the frustration with China’s red tape and corruption will also end up realizing that India is no different and in no better position. Firms that wishes to open in the Indian market will undoubtedly face significant challenges like difficulty obtaining business licenses, overcoming confirmation delays as well as in some cases indistinct demands for corporate “donations”. In addition, India is one of the world’s worst when it come to protecting intellectual property. To this day, this has become one of India’s greatest weaknesses. According to the fifth edition of the U.S. Chamber International IP Index, India’s intellectual property framework is said to be extremely poor in terms of performance in global standards. Besides that, another issue India face is the county has lots of workers but most of them lack in skills. The country has a whopping 500 million workers and yet more than two-third of the employers are fighting to find employable workers, as per the World Economic Forum (Berhat 2017).

In countries like China, some trends are just too conventional and not unique to the market. Market saturation due to cost and a decrease in operator subsidies in the US causes consumer to replace their device less frequent. This is also a challenge faced by many in developed nations. According to Apple’s CEO, the reason why iPhone struggles in China is not only because of macroeconomic challenges but also some other factors such as consumers adjusting to a nation with lesser carrier subsidies, decreased pricing for iPhone battery replacement which leads consumers on the advantage as well as the growth of the US dollar strength (McCaskill 2019).

In my opinion, the possible implications towards Apple now and the given future is that Apple will eventually fall behind Chinese manufacturer smartphones like Huawei, Xiaomi and OnePlus. As it has been proven, Huawei overtook Apple for the first time in seven years in 2018, which makes Huawei the world’s second largest smartphone seller just behind Samsung (The Guardian). In addition, Apple won’t go any further beyond China if they continue to tone deaf on price where per capita income remains low. Consumers will also be bored as Apple constantly introduce iPhones with standardize design, while consumers are actually seeking fresh-looking iPhones. To control and manage trade, government have a few key policy areas that can be utilized to establish rules and regulations. In my opinion, import quotas and voluntary export restraints (VER) are two strategies government should take into account. This is to limit the amount of imports into a country. Aside from that, governments should also promote free-trade zone to promote trade with other countries. This can help countries boost their economic development as well as creating long lasting jobs to support local economic success (Burghard 2009).