Will the Wechat Ban Affect Apple's Business in 2020?
The Trump administration has recently taken a big step with regards to Wechat. It is a Chinese social media and messaging platform that was first released in 2011. As of 2018, it has over 1 billion monthly active users.
The Trump government has issued an executive notice barring all the businesses from the U.S. territory, doing businesses with Wechat. This order will come into effect within the next five weeks roughly after this Chinese government has threatened to cut all chords of ties with the U.S. governments, which could lead to massive losses of Tech giant, Apple which has a strong base in the world's second-largest economy.
In this post, we'll discuss the background details of the reason for the Wechat iOS ban, the effect of this on Wechat, and widespread rumors around this story. So, without wasting any time, let's get on with it:
What's the Role of WeChat in China
Wechat can access the location history, text messages, and contact books of the users. Because of the growing global popularity of this messenger App, the Chinese government employs it for conducting mass surveillance in China.
Countries like India, the U.S., Australia, etc. believe that Wechat poses a massive threat to their national security. In the Chinese territory, this App has a significant role to play, up to a certain extent that Wechat is an essential part of starting a company in China. Wechat is a one-stop App that lets Chinese people order food, manage invoice information, etc.
Global social media platforms such as Twitter, Facebook, and YouTube are blocked in China's territory. Therefore WeChat has a dominant hold in the country and backed by the government.
What Will Happen After Apple Remove WeChat
The annual shipment of iPhones in the world will be cut down by 25 to 30% if the tech giant Apple removes the WeChat service. While other hardware like iPods, Mac, or Airpods will also fall by 15 to 20%, this was estimated by Kuo Ming-chi, International Securities analyst. Apple hasn't responded to this.
A recent survey was done on the Twitter-like platform known as Weibo service; it asked people to choose between their iPhone and WeChat. This great survey, which involved 1.2 million Chinese people, was eye-opening, as roughly 95% responded by saying that they'd instead give up their device for WeChat. An individual working in a fintech, Sky Ding, said, "The ban will force a lot of Chinese users to switch from Apple to other brands because WeChat is essential for us." He further added, "My family in China are all used to WeChat, and all our communication is on the platform."
In the year 2009, Apple launched iPhones in China, and since then, there has been no looking back for the world's leading smartphone brand as Greater China contributes to 25% of Apple's revenue, with $43.7 billion roughly sales.
Apple has plans to launch its next-gen iPhones with 5G connectivity in China. However, the WeChat iPhone ban would prove to be a setback as approx 90% of communication, both personal and professional, happens over WeChat. Therefore, the ban could quickly force people to look for alternatives such as Huawei. Or, Xiaomi is also ready for the void of flagship phones having 5G connectivity and grab the iPhone market in China. They have a vast selection of devices, spanning from laptops, wireless earphones, fitness trackers to tablets.
So, Apple users are quite worried about the WeChat ban. There is also speculation that yes, WeChat will be removed from this Apple store, but could open up to allow WeChat installation in some parts of China. This can save Apple's business in China to some extent, but revenue is still expected to be affected severely.
The U.S. Commerce Department has 45 days to explain the scope of this executive order and how it will be enforced. The perspective of WeChat as a sales channel to reach out to the million people, which has cast a shadow over the top American companies which include Nike, which is operating digital stores on WeChat, however, none of these have the same threat level of threat that Apple is exposed to.
Rumors about the WeChat on iPhone 2020
There are rumors surrounding the latest Trump government executive orders for U.S. companies to give up all their commercial relationships with WeChat. But, one thing's for sure that WeChat will significantly hurt iPhone sales in China. If the order is fully implemented, then the sale of iPhones will decline to as much as 30%.
“The Trump Administration has adopted a defensive measure to protect itself. Because the Internet in the world has been divided into two parts by China, one is free, and the other is captivated,” said a high-level U.S. official.
However, it is not clear whether Apple has to remove WeChat from its Apple store only in the U.S. or if it applies to the Apple Store across the globe.
There are a lot of negative campaigns running over the various social media platforms of China to not buy iPhones, and people are responding in favor of WeChat. For Chinese people, WeChat is way more than Facebook to an American, WeChat is a part of their day-to-day life, so simply they can’t give up.
So, at last, the fingers are crossed, let's see how the WeChat iOS ban will be enforced and monitored, and how U.S. companies like Apple will react has to be seen in the coming days or even months after. Brands like Apple have to think fast. Otherwise, they are going to be in big trouble, especially when they're in the process of unveiling their new iPhone range next month.
What do you think about this ban, do share it with us via the below comment section?
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