At $2.67 trillion and $558.42 billion, Apple and Tesla have two of the highest net worths of any company on the planet.
However, these tech companies and others like them may see a serious dip in profits this year as China turns its back on Western products.
Sales in China Make a Big Difference
While many people are fully aware of just how big and successful both Apple and Tesla are, few understand how the tech companies have raked in such incredible profits over the past decade.
It’s because, in addition to selling their products in the USA, both Apple and Tesla sell an almost unbelievable number of their beloved devices and vehicles in China. In fact, Apple sold $74 billion worth of iPhones in China in 2022, which is more than one-third of the total sales for that year.
32%% of Tesla’s SAles Last Year Were Made in China
Just like Apple, reports say that 32% of Tesla’s sales in 2023 were made in the Chinese market.
According to Statista, the electric vehicle company made a whopping $15 billion in profits last year, meaning about $5 billion was made just in China.
These Numbers Are Slowly Declining
Although these numbers look huge to anyone who doesn’t own a multi-billion dollar company, the truth is that these statistics mean sales are down for both Apple and Tesla in the Chinese market.
And the worst news for American tech companies is that experts believe the companies’ profits in China will continue to decrease, or maybe even plummet, in 2024 as China has made some big changes this year.
Why Are Apple Sales Down in China?
Experts argue that the main reason why iPhone sales in China have dropped by 24% since the start of 2024 is because “American products [are] falling out of favor in China.”
However, there are several factors to this argument; some say that users are simply disappointed by the lack of new features on the most recent iPhone, others report it is because the Chinese government banned iPhones for city officials, and yet another group says it’s because China has launched its own version of the smartphone.
The Huawei Mate 60 Pro Is Taking Over China
Huawei is a China-based tech company that recently released the Mate 60 Pro, which many say rivals the iPhone 15 Pro in almost every way.
Reports say Huawei sales have increased by 64% in the last quarter, proving that Chinese consumers are choosing the homemade Huawei over the American-made iPhone.
China’s Own EV Company Is Clearly Favored Over Tesla
In a similar turn of events, China’s electric vehicle company BYD has also seen a significant increase in sales while Tesla’s continues to drop.
In January 2024, Tesla saw a 16% decrease in sales in China from the previous year, whereas BYD experienced a 43.4% increase from last year.
China Has Been Working Tirelessly to Release Competing Models
In recent years, as several American tech companies like Tesla and Apple have been dominating the market in both the USA and China, Chinese companies have been working relentlessly to try to create competitive products.
And, according to the numbers, it seems that they have finally succeeded. China now has several homemade options in both the electric vehicle and smart device sectors, and the nearly 1.5 billion residents of the country seem excited to support their homeland.
Both Countries Are Now More “Isolationist”
For years, Americans have been proud to buy products made by their compatriots, but China has seemed content to buy from abroad. But experts say that while this feeling is intensifying in the USA, it’s completely changing in China.
Gene Munster, a managing partner at Deepwater Asset Management, explained to Business Insider, “Both the US and China are becoming more isolationist. That favors domestic brands.”
The Chinese Government Is Certainly Pushing for Change
It’s important to note that this change in consumer habits in China is partially based on the fact that the country now has its own products that are equal in almost every way to America’s, but there’s another reason, too.
The Chinese government has been actively trying to encourage its population to buy locally by passing legislation to invest in national companies, especially in the tech industry, as well as shut out any foreign businesses.
Will Apple and Tesla Struggle to Turn a Profit in 2024?
With these changes in the Chinese government and market, many are worried that both Tesla and Apple will see a significant decline in revenue over the coming year.
However, the companies will almost certainly still be considered profitable because of their immense reach. But it’s highly likely that their stocks will decrease as sales plummet, so for those invested in the tech businesses, it may be a rough year.
The CEOs of Both Tesla and Apple Will Have to Adjust
It’s become clear that Elon Musk and Tim Cooke, the CEOs of Apple and Tesla, will have to make some serious adjustments this year to keep investors happy and sales climbing.
What that will look like is still anyone’s guess; it may mean a larger focus on sales in the USA and Europe, new and innovative products that China has yet to perfect, or even a decrease in spending.
