After the downward revision of the income announced by Tim Cook last week, there were many voices that rose to say that, in one way or another, China is a problem for Apple. A bad result of which, apparently, the Cupertino company was the only one affected but it seems that it is not so.
China is experiencing a slowdown in its rate of economic growth and that is affecting many companies operating in the country. Not only to Apple. In the last three decades, China has experienced enormous economic growth. In 1992 and 2007 it reached maximums of 14.2% annually, a figure that reflects the rapid transformation of its society and economic power.
Everything indicates 2018 has been a year in which growth has been lower than in previous years, being the second half of the year much worse than expected.
You do not have to search too hard to find the causes:
- Developing countries have easier to grow their economies faster than one developed. For starters, they can count on advanced technology from other countries, skipping the intermediate steps that have led to them.
- It is relatively easier to grow a lot from a smaller base. For example, when you are 10 and you grow 1, it is 10%; when you have 100 and you grow 1 is 1%.
- The landing of China’s economic growth to more normal levels of an advanced economy has been aggravated by a trade war with the United States. Both countries have numerous commercial ties in various economic sectors: raw materials, agricultural products, technology, etc. The US is in the midst of a process of reviewing a multitude of trade agreements led by the Trump administration.
Several companies in various sectors have been affected abruptly and unexpectedly at the end of 2018. Samsung has just announced that it expects a 28% drop in operating profit in its Q4 guidance for 2018.
LG has warned that it expects its operating profit to fall 80% in the same period. Another well-known company is Baidu, a kind of Chinese Google, whose CEO has announced that “winter is coming.”