Apple (NASDAQ:AAPL) stock was down 2.22% in early afternoon trading on December 14. Shares have dropped 11% over the past month. Apple’s price targets have been cut by analysts as the tech sector selloff in the states has worsened since the late summer. Now the company is wrestling with more bad news.
Chinese companies have called for a boycott of Apple products in China after the arrest of Huawei CFO Meng Wanzhou. China has harshly condemned the move and detained two former Canadian diplomats in response. It has also targeted Canadian companies like Canada Goose (TSX:GOOS)(NYSE:GOOS) as part of its boycott, which has driven a steep drop in shares.
One of Huawei’s suppliers, the LCD display maker Menpad, has said that it will punish employees who buys the iPhone. It will reward staff with a 15% subsidy if they purchase Huawei or ZTE phones. Apple products in China have never posted performance comparable to their Western counterparts. Consumers in China are more savings-oriented and tend to replace phones at a slower pace, often until they are obsolete or no longer functioning.
However, a growing young middle and upper class in China have increasingly adopted the spending habits of North Americans. The ongoing trade war between the United States and China could potentially lead to a long-standing "cold war" between the two nations. This has the potential to curb the growth projections of Apple and other companies that rely on growth in the rapidly expanding Chinese consumer market.
