Tech companies show some recovery in China after economic fallout

Tech companies show some recovery in China after economic fallout

Leading tech solutions companies show some signs of recovery as the likes of Apple ship products to Chiina after a virus slump

According to report recently released, Apple Inc. shipped about 2.5 million iPhones to China in March. This represents a slight rebound after one of the company’s worst months in the country ever, according to government data that was recently published. On a similar note, makers of smartphones are hoping for a strong recovery in demand in China, with the country seemingly witnessing a reduction in the cases and effect of the deadly coronavirus is now subsiding.

According to a report from the China Academy of Information and Communications Technology (CAICT), mobile phone shipments in China in March totalled 21 million units. The number representsa more than three-fold increase from February. However, itremains down roughly 20% compared with March 2019.

Many Chinese retailers resumed operations in early March, while brick-and-mortar outlets re-openedand e-commerce logistics got back in gear after the virus and tough containment measures brought much of the economy to a standstill in the first two months.

The government think-tank revealed that Apple shipped about 500,000 phones in China in February.

Many smartphone makers are also looking to China to cushion declines in the demand in overseas markets in coming months.

In its quarterly earnings call, the then-CFO of Xiaomi Corp stated that the Chinese market had recovered to roughly 80% of its normal levels.

The (Chinese) market has entered a full recovery stage, and… has already recovered to 80 to 90% of the normal level,” Chief Financial Officer ShouZi Chew said on an earnings call.

Chew stated that sales in China declined in the first quarter due to the economic impact of the virus, while failing to reveal the extent of the fall. However, the CFO expressed his optimism that demand for smartphones will be resilient globally even though the virus was spreading to other countries. The company will take a hit in global sales during March and April, he said, but expects to see signs of recovery in May.

If we take reference from China’s experience, I think smartphone demand is resilient,” said Chew. “I think it will rebound quickly.”

Overseas growth has been a key strategy for Xiaomi and other Chinese rivals in recent years, with the domestic smartphone market witnessing a period of contraction.

The company recently wrote a letter to the government of India, one of its largest markets, where it requested that the government consider smartphones an essential commodity and therefore exempt from shipping restrictions.

Xiaomi, which recentlylaunched a new flagship 5G smartphone, the Redmi K30 Pro, said on March 19 that 80% of its supply chain had resumed operations.

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