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Chinese Patriotism: Huawei Smartphone Sales Jump 66% In China As Apple iPhone Sales Slump

Courtesy of ZeroHedge View original post here.

We're starting to get first-hand knowledge of what we're coining as the "blowback period" in the trade war. This is a point in time when Chinese consumers, downright furious of President Trump's protectionist policies that targeted Chinese companies over the summer, have collectively stood up to an aggressor (the US), and have secretly fired back, targeting US firms by abandoning their products for domestic ones, all in the name of patriotism. 

Honestly, over time, the trade war, if solved next month or next year, or who knows at this point when it'll be solved, will have devastating consequences for corporate America as their market share in China will erode as patriotism forces consumers to gravitate towards domestic brands. 

A new report from Canalys, an independent research firm focused on technology, has linked patriotism in China for the jump in Huawei smartphone sales in the third quarter.

Huawei's 3Q19 smartphone sales soared by 66% YoY in China, compared with a 31% increase in 2Q19.

Between 2Q-3Q, President Trump escalated the trade war to near full-blown, and also attacked individual companies with economic sanctions and banned certain ones from doing business in the US. Chinese consumers responded by ditching American products, like Apple iPhones, as this is some of the first evidence we've seen of the blowback period, likely to worsen in 4Q19 through 1Q20.

As shown in the chart below, the July-September period of 2019 was a devastating quarter for Huawei's top rivals, including Vivo, Oppo, Xiaomi (other Chinese brands), along with depressing sales from Apple. 

Smartphone shipments overall were 97.8 million, down 3% from 100.6 million for the same period last year.

Apple's YoY slump gained momentum from -14% in 2Q to -28% for 3Q

Chinese patriotism allowed Huawei's market share in the country to expand from 24.9% to 42.4% over the past year.

Canalys analyst Mo Jia said, "The U.S.-China trade war is also creating new opportunities," adding that, "Huawei's retail partners are rolling out advertisements to link Huawei with being the patriotic choice, to appeal to a growing demographic of Chinese consumers willing to take political factors into account when making a purchase decision."

The blowback period has begun, and corporate America should be terrified that their market share in China is about to evaporate. 

 

 


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