Introduction
The Asia-Pacific area is one of the world’s developed and fastest-growing economic regions. It has evolved as a crucial site for numerous multinational corporations, offering a broad range of benefits and prospects over the last decade. The introduction of Apple in the region has enabled realization of major challenges amid stability and business progress. However, the area has also had to deal with several difficulties. Slowing economic development, an aging population, rising income and wealth disparities, and the effects of climate change are just a few of the serious and complicated concerns that the area is presently dealing with. Concerns have been voiced about the region’s future due to poor worker productivity, widening economic gaps, and an aging population. Future economic development will continue to be concentrated in the area. So, the area has a direct impact on the economics of numerous nations throughout the world and millions of lives. The major challenges that affect Apple company in Asian region is currency rates fluctuations, stiff competition and regional political tensions that make it hard to have smooth flow of operations as far as business continuity and coverage is concerned.
The parts covered in this essay include the critical analysis of how the currency rates affect the business, the issues that are raised by competitive advantage and how geopolitical tensions affects Apple. It is a common belief that the world is growing more linked with each passing day. When it comes to the economy, this statement is undeniably accurate. The rise of globalization and the introduction of technologies such as the internet and the smartphone have played a significant role in narrowing the gap that exists between different nations and populations. This has made it possible for a more unrestricted exchange of goods, services, and ideas all over the world. Because of this, the status of the area or the issues it faces has a substantial influence on the economy of other linked enterprises located all over the world.
Despite the benefits of globalization and the new market systems, companies such as Apple, an American conglomerate that deals in a wide variety of goods, confront several obstacles due to globalization. Computers, smartphones and tablets, computer accessories, and software are all produced by Apple Inc. situated in the United States. Personal computers were popularized by introducing a graphical user interface developed by Apple in the 1980s. The company’s headquarters are in Cupertino, California, the United States. Apple’s digital gadgets include Macs, iPods, iPhones, and iPads, which are among the company’s best-known offerings (Vickers, 2018). This covers the OS X and iOS operating systems together with the iTunes music browser and iWork for creating and developing applications.
Since Asian countries have the world’s most populous population, even though Apple is a US company, the company has shifted some of its operations to Asian economies such as Vietnam, China, Taiwan, South Korea, and others to diversify its sources of production costs while also improving its market expertise (Kawamata, 2018). Due to operational, geopolitical, and legal challenges, Apple has decided to move part of its manufacturing operations out of mainland China and into the US. However, China is still the primary manufacturing location for its products.
Apple uses outsourcing partners to provide and manufacture components for iPhones, iPods, Mac computers, and other wearable devices. Apple will spend 98% of its 2020 materials, production, and assembly budget directly with 200 suppliers (Armitage et al., 2020). “Eighty-five percent of the vendors have production facilities in Asia. In 2020, six of the 30 nations, where Apple products were made accounted for more than 80% of yearly output (Ferracane & Lee, 2018). China accounted for 42% of the total, with Japan (16%), the United States (9%), Taiwan (6%), South Korea (6%), and Vietnam (5%)” (Ferracane & Lee, 2018). Mainland “China, Hong Kong, and Taiwan” make up Apple’s third-biggest revenue region in Greater China. An 87-percentage year-on-year gain in sales in the region was much greater than the 35 percent rise in the Atlantic and 56 percent increase in Europe, according to Apple’s quarterly report for the quarter ending March 2021 (Vickers, 2018). On China, which has the country’s second consumer market, Apple’s profits and brand growth depend significantly (Vickers, 2018). Since China and the rest of Asia are crucial to Apple’s products now and in the future, so too they are.
There is a robust macroeconomic condition that has various effects in the area. That translates to an average of over 6 percent in most of the region’s marketplaces, may benefit foreign businesses (Vickers, 2018). Globalization and commerce have resulted in a surge in foreign investment and commerce. Enterprises considering entering the market must research the importance of the Asia-Pacific region and the amount of time and resources needed to create a presence (Armitage et al., 2020). Competition, currency rates, legal systems, diverse cultures, and local political conflicts are just some of Apple Inc.’s issues.
Currency Rate Fluctuations in the Asian Region
Currency Rate Fluctuation is the first issue Apple Inc. has to deal with in the Asian economy. The Asia-Pacific area does not have a unified regulator for currency trading. As a result, Asian countries may keep their currency exchange rates low to encourage exports, which is something Western economies typically bemoan (Summers, 2016). Foreign firms have additional difficulties in development and profitability since they must operate in local currencies and under complicated regulatory regimes. International firms like Apple Inc. should hire local tax advisors and government relations specialists who can help them through the complexities of dealing with different currencies and regulatory frameworks. Many Asian currencies, such as Malaysia, China, and Taiwan, have capital controls or restrictions, making it crucial not to use a Western-style approach to currency management in these nations. Some nations do much of their business in US dollars.
Lowering the price of its products is one way Apple is attempting to mitigate the effects of currency rate fluctuations on its sales. Correspondingly, on Tuesday, during the company’s quarterly results call, CEO Tim Cook spoke about the depreciation of the Turkish lira against the dollar and Apple’s sales decline of $700 million in Turkey (Vickers, 2018). According to Apple, currency fluctuations have an effect on price in countries like Brazil, India, and Russia. This will be Apple Inc.’s first price decrease in the 12-year history of its iPhones, and it will be based on introductory pricing in local currencies outside the US rather than the increasing US dollar (Vickers, 2018). These price hikes are an effort to counter the slumping sales of the iPhone, especially in countries like China, where the US dollar’s appreciation over the last year or two has raised the price of Apple’s goods far beyond their competitors.
Stiff Competition and Deregulation of Rivals in Asian Economies
In Asia, Apple’s second problem is the fierce rivalry brought on by the continent’s deregulation and proliferation of rivals. Despite the recent liberalization of various economies in the Asia-Pacific region, several still impose severe limitations on international corporations’ activities. There are issues with foreign corporations’ exclusive technology and intellectual property rights. Shareholders in a company must adhere to local laws and regulations. This may be a source of uncertainty for Western enterprises because of the prevalence of lucrative black markets in Asian countries (Summers, 2016). A number of nations are concerned about the impartiality of local courts when it comes to developing and preserving legal precedents to protect intellectual property and proprietary technology. Businesses in China and Southeast Asia are able to compete with more developed Western enterprises because of the rapid development of Asia-Pacific nations and the rise of the region’s middle class. Technology innovation, according to many in the West, thrives in Asia.
It is true that the iPhone’s success is due to Apple’s excellent design. As a result of the company’s success, though, copycats have set their sights on Apple. For years, large Chinese smartphone makers have been offering handsets that resemble the iPhone. In both design and nomenclature, Huawei’s Honor 6 Plus is compared to Apple’s iPhone, according to Business Insider. Huawei, Oppo, and Xiaomi did not stop at replicating Apple’s design when it came to the Chinese and Asian markets’ top three smartphone producers. Their respective market shares are 24,6%, 20,5%, and 13,6%, respectively (Armitage et al., 2020). They have pushed Apple’s market share in China to 7.5% by introducing their own innovative features. Huawei’s P20 Pro, which garnered the same number of reviews as Apple’s iPhone X and Samsung’s Galaxy S9, is an example of this. Apple’s iPhone X has a three-lens Leica camera and an AI processor, but this phone has a long-lasting battery and an AI processor. It’s also less expensive than the iPhone X’s original price of $999, which is $694. It is possible that Oppo’s Oppo Find X, which retails for $779, may be an equally strong competitor to the iPhone.
Businesses like Apple need to be prepared for more sophisticated competition in the area and thoroughly research the local competitive landscape before joining it. Certain international corporations may be disadvantageous because of long-term planning cycles since Asian rivals frequently have shorter product launches (Ferracane & Lee, 2018). You may learn a lot about how to compete in your sector if you work with consultants that promote small businesses. Western firms should hire regional legal advice to be fully prepared for any legal challenges or possibilities they may encounter in any country where they seek to do business. It’s important to remember that no two Asian countries are the same. For example, the legal landscape in China, the ASEAN area, Japan, or South Korea will not be the same as the legal environment in the rest of Asia. Skepticism from a professional perspective is beneficial.
Regional Political Tensions
This problem is compounded by regional political conflicts, which directly impact Apple’s operations and marketing strategies. Relations between Asian neighbors may have a detrimental effect on international businesses operating in Asia. This must be weighed against the ambition of smaller regional economies that have a strong trade and investment relationship with China (Ferracane & Lee, 2018). In order to compete with China and the Southeast region’s rising economies in Southeast Asia, western firms need a strategic approach to risk and management. As a result of the current Ukraine-Russia confrontation that borders Asian economies, the success of apple operations in Asia is in jeopardy. Anxiety has been high due to the continuing geopolitics in southern East Asia, while most economies were still recuperating from the epidemic of H1N1 (Armitage et al., 2020). Last but not least, the epidemic that arose in Asia, primarily China, has had a devastating effect on Apple, which has seen its net earnings vary from 2019 to 2022.
In order to keep on top of regional “political, economic, and social developments,” multinational corporations like Apple Inc. need engage public relations and regulatory affairs councils (Vickers, 2018). Begin by contacting government departments that deal with foreign investment. They have a goal of increasing FDI; thus, they should be able to help you get in touch with the proper government officials. In Asia, where the boundaries between industry and government are frequently muddled, working with the authorities is a major thing.
Conclusion
Asian economies are among the most sophisticated and fastest-growing globally. Because of the region’s aging population and low worker productivity, concerns have been raised regarding its future. Economic expansion in the Asia-Pacific area can boost the fortunes of international businesses. A single authority does not govern the Asia-Pacific region’s currency markets. Low exchange rates in Asia may be used to encourage exports. Companies from other countries have to deal with different currencies and a plethora of rules and regulations exclusive to their own country. Apple Inc., for example, should hire local tax, management, and governmental relations counsel. Local Asian enterprises have greater cash and access to sophisticated advising services, so Apple CEO Tim Cook has issued a warning. As local Asian rivals frequently require less time to bring items to market, certain Western firms may be disadvantaged by long-term planning cycles. Due to the pandemic’s roots in Asia, mainly China, the ongoing geopolitics has hindered economic recovery in South East Asia. To be successful in this market, Western firms must be well-prepared and have a proactive approach to risk and management.
References
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