Apple’s $ 44 billion China market threatened by Trump WeChat Ban

U.S. retailers in Xiamen As Corporate America sounds alarm over Trump's threats over China

Photographer: Qilai Shen / Bloomberg

Apple Inc. spent years building China into a $ 44 billion growth driver. Then last week the American president threw all that into doubt.

IPhone loyalists across China are now considering their attachment to the device after Donald Trump issued an executive order last week to unlock U.S. companies doing business with WeChat, the super-app that has become integral to daily life in the country . Plans to go live in about five weeks threaten to ban iPhones from being made into expensive “electronic trash,” said Hong Kong resident Kenny Ou, who sees WeChat as one of the most essential software on his handset .

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Customers wearing protective masks will see products on display at an Apple Inc. store in Shanghai on March 2.

Photographer: Qilai Shen / Bloomberg

On Wednesday, Tencent executives held a conversation after a conference on earnings stressed that they believed the ban was only applied to WeChat in the US and it should not affect its Chinese cousin, known as Weixin. But she added that she herself was still seeking clarity, and the sweeping language of Trump’s order means it could still spell trouble for Apple.

The American company has just come off a strong quarter in China, its main international market and where it faces stiff competition from local Android rivals such as Huawei Technologies Co. – which, unlike Apple and its locked app stores, are free to offer WeChat directly if their users have access to download it themselves. The Cupertino company’s strategy of tapping first-time buyers and awaiting consumers back with cheaper devices such as the iPhone SE could be completely derailed if it could not offer WeChat and continue to exacerbate US and China trade tensions.

The flagship app of Tencent Holdings Ltd. connects a billion users worldwide and is used for everything from chatting with friends to shopping for movie and train tickets to paying for restaurant and utility bills. While questions remain about how Trump’s mandates will be implemented, any ban on the use of WeChat threatens to erase a major communications link between China and the rest of the world and prevent US companies such as Starbucks Corp. and WalMart Inc. consumers reach in the second largest economy in the world.

If Apple were forced to remove the service from its worldwide app stores, annual iPhone shipments would drop 25% to 30%, while other hardware, including AirPods, iPad, Apple Watch and Mac computers, could fall 15% -25%, TF International Securities analyst Kuo Ming-chi rumored in a research note. Apple did not immediately respond to a request for comment from Bloomberg News.