How Would You Feel About The US If Apple's Revenues Dropped 30%?

There was a bit of news that did not get a lot of attention from the mainstream financial media (no surprise there). The narrative that the United States is having its power threatened by China is absurd. Nevertheless, the media needs to keep this idea up because it helps to scare people.

The reality is that China is in a freefall. There is a good chance that the country will not exist in its present form by the end of this decade. It could break into anywhere from 2-5 pieces. The CCP is doing its best to reign things in and maintain control. This is a tall task considering what is taking place.

One of the main issues is that China is the leading global exporter. This served the country very well over the last 40 years. Unfortunately for them, the proverbial music is about to stop. As highlighted a number of times on this blog, the demographics are going to cause a major headache for the nation.

There is also the fact that they Chinese are also upsetting much of the developed world. At the top of the list is the United States.

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Huawei Down 30%

The title of this article is meant to get your attention. What if a company like Apple suddenly had a drop of their revenues to the tune of 30%? How would one be feeling about that?

Of course, taken in a vacuum, it might not mean much. However, in light of all else that we pointed out about China over the last few months, it is an eye-opener.

The situation is exactly what Huawei, one of China's leading technology companies, experienced. This company is at the forefront of 5G technology along with being the second largest smartphone maker in the world. Due to its banning by the United States, the 2021 revenues were down 30%.

Guo said next year "will come with its fair share of challenges" but that he was satisfied with Huawei's 2021 business performance.

"An unpredictable business environment, the politicisation of technology, and a growing deglobalisation movement all present serious challenges," the letter, published on the company's website, read.

Source

It does not appear there is optimism that things will recover in 2022.

Economic Contraction

There is no way to sugar coat this. Chinese companies are facing major headwinds, even without a global slowdown. If the worldwide economy does suffer a setback, for whatever reason, this is going to be catastrophic for the planet's second largest economy.

So far, we saw a slowing growth rate. The last two years were mired with difficult circumstances, so perhaps the Chinese can be excused on this one. However, with the diversification of supply chains underway, there is no way that China is going to benefit. As more is manufactured elsewhere, the piece of the pie that China has will decline.

Ultimately, it will likely result in a contraction of the economy. Many feel the economy is already at a point of being flat. The increase is due to the government's blatant manipulation of the numbers. It is hard to conclude things are going to expand when the real estate market, accounting for 30% of GDP by most measures, is tightening.

We are even getting news of situations like this:

Evergrande, the indebted property developer is now ordered to demolish 39 structures for "breaching building approval procedures". Source

At least local demolition crews get some work out of this. For Evergrande, it is going to be difficult to sell the units that were reduced to a pile of rubble.

Nevertheless, there are signs in many areas of the economy that China is in trouble. A slowing growth rate, even if it doesn't go negative, with their debt load is going to be problematic. For decades, the country was able to outgrow its problems. This is no longer the case.

When a nation's technology sector is starting to get hammered, there are major issues. Between sanctions around the world as well as the CCP's desire to reign in the "tech billionaires", it is hard to see how expansion is going to remain in force.

The next 12 months will likely tell us which direction things will go in for the largest economy in the Pacific.


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They really brought it on themselves. They got a little power in the big world and quickly turned and started to flex and threaten major countries. yeahh not the smartest thing to do when your country is just starting to become a economic power house. Now they are paying the price and will continue to. You don't go talking shit to the people fueling your industry lol

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Is Apple a Chinese company? I thought it was American!?

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Apple is an American company but I think he was using Huawei (Chinese company) as an analogy.

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If Apple's revenues dropped by 30%, I don't think I would be concerned about the U.S. market as a whole. Apple is only one company, and if their revenues dropped it's probably because they couldn't compete in the market. Hopefully, they would just be replaced by an innovative competitor.

However, in a place like China, where competition and entrepreneurship isnt as encouraged, I would be highly concerned.

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If Apple's revenue dropped 30%, the stock market would probably crash. As one of the biggest companies, it's stock price would drop and drag the rest of the market down with it. Afterwards everyone would be skeptical about whether other companies would be affected and lowering everyone's expectations.

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I think the mistake china is making is that they want assume world power by all means.they have actually tried in their own little ways technologically but at the the same time they brought themselves some difficulties through their quest for power and concerning the 30%drop the reason why china economy is dwindling now is because of they really didn't give room for competition and that's why ever since evergrande started having issues is affecting their economy,but in US I don't think apple can cause such noticeable changes.

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It’s nice to hear the other side of the story.

A lot of what we hear is how great China is in so many areas and how efficient their government is as if authoritarianism was a cure for all our problems.

I recognize the huge economy of China and the success story of the tremendous change in their country from the one nearly destroyed in a civil war in the 1930’s and the estimated nine million people killed in political re-education camps and many due to starvation and disease during the collapse of the countries food supply chain in the aftermath of war and political purges which ended many lives and destroyed their businesses, farms and networks. War and political upheaval are brutal tragic events with many victims.

The rebuilding of such a huge and diverse country in 40 years to a global economic power is admirable. But the capitalistic system they allowed to flourish under the government system of communism should get credit, along with a huge influx of capitol from the outside world, the hard work of its people and favorable governmental monetary policy which kept their hoods cheap for many years.

I agree that China is in trouble as an exporter of everything to a world growing ever more suspicious of its motivations and its products.

And if it’s one thing history teaches us that a government on the brink of losing control of its people often becomes more harsh and restrictive as it tightens its grip on the people struggling to be free. In my view that’s what’s happening in mainland China, and the places like Hong Kong. Political unrest, riots and demonstrations, along with the arrest or disappearance of businessmen suggest the tightening grip of a totalitarian regime trying to keep control.

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There is a good chance that the country will not exist in its present form by the end of this decade. It could break into anywhere from 2-5 pieces.

How did you come to this conclusion?

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This article really brought back some memories of the USSR. As a child growing up there was so much fear about the USSR. Boom they split into a bunch of different countries.
China doing the same thing would be interesting, but are we taking into consideration the toll of the pandemic.
Everything on store shelves is increasing in price, even at Walmart. Once this Pandemic is taken care of proper like Polio the economy may take a nice upturn, maybe?

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