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Microsoft Defends iPhone-Only Order for China Employees Amid Online Backlash

2024-07-10 12:02:02.042000

JD.com, one of China's largest e-commerce companies, is facing challenges as its shares hit a record low. Banks and brokers have cut price targets and revenue growth forecasts for the firm, reflecting concerns over the slowdown in consumer spending and the overall state of China's economy. Citi Research has lowered its revenue assumption for JD.com for the third and fourth quarter, citing a muted consumption trend and intense competition. Nomura has also expressed concerns, stating that JD.com has not seen any meaningful improvement in retail and has missed out on the positives from China's stimulus policies. In response to the challenging environment, JD.com has filed a police report over online rumors maliciously linked to the company [0bf1da53] [42667a37].

Chinese e-commerce giant JD.com is doubling down on its budget shopping platform Jingxi in an effort to win consumers in the 'sink' market, which consists mostly of small towns with limited spending power. JD.com is taking full control over Jingxi's operation, logistics, and after-sales services, following a 'whole custodian' model similar to PDD Holdings. The head of Jingxi will report directly to JD.com CEO Xu Ran. JD.com launched the Jingxi business unit in 2020 to target extremely budget-conscious consumers, but the response has been lukewarm. Jingxi plans to expand its partnerships to cover more than 10,000 factories by the end of this year. During the recent 618 midyear shopping festival, Jingxi received over 1 million orders in the first four hours, more than triple the previous day's orders. Over half of China's online shoppers, or 647 million people, come from sink markets [4d76ca46].

Microsoft is requiring all of its China-based employees to stop using Android phones for work purposes and switch to iPhones for cybersecurity reasons. The employees will each receive an iPhone 15, which they can pick up at specific locations in Mainland China or Hong Kong. Microsoft staff in China will also have to use Microsoft's Authenticator password manager and Identity Pass app on their iPhones to verify their identities in order to log into work devices, and Android access won't be available. The change is necessary because the now-required apps are only available via Google's Play Store and Apple's App Store. The move toward security-based apps for employees in the region is part of Microsoft's Secure Future Initiative, which the company established in November 2023 to overhaul its cybersecurity standards. In April, US federal regulators said that Microsoft needs to make 'fundamental' reforms to its cybersecurity policies after a China-backed email hack [7cfbbd48] [ce8bef0d].

Apple's iPhone sales in China are bouncing back after the company implemented aggressive price cuts. Shipments of foreign-branded cell phones, primarily iPhones, saw a significant surge of 52% in April, reaching 3.489 million units. This growth rate represents a major acceleration compared to the 12% growth observed in March. Although Apple lost its top position in China's smartphone market in Q1 2024, sales began to rebound in March following the price reductions. Last week, Apple slashed prices on select smartphones by up to 23% on Tmall and JD.com. These discounts are expected to put pressure on competitors to further reduce their prices [4b8f5ad9].

China's Singles Day, also known as 'Double 11,' is a major shopping festival that has surpassed Black Friday and Cyber Monday in sales. This year, e-commerce platforms like Alibaba and JD.com are engaging in a pricing war to attract consumers amid an economic slowdown. Chinese consumers are facing challenges such as high unemployment and stagnant wage growth, leading to reduced spending. The housing market crisis has further impacted consumer confidence. A survey shows that many Singles Day shoppers plan to spend less or maintain spending at previous levels. The hashtags 'downgraded consumption' and 'if I don't buy, I can save 100%' have become trending topics on social media. However, there is still demand for premium brands and products that enhance health, lifestyle, and self-expression. Companies like Nike, Lululemon, and Starbucks have reported strong performance in China. Overall, the pricing competition during Singles Day reflects both the intense competition between e-commerce platforms and the challenges faced by Chinese consumers [9f722071].

Feminist consumers in China are challenging the 'pink tax,' where goods and services marketed to women are priced higher than those marketed to men. The issue has gained attention on Chinese social media platforms, with the hashtag #PinkTax attracting millions of views. Women in China are particularly frustrated with the higher cost of menstrual products and have called for the government to drop the 13% tax on these items. The pushback against the 'pink tax' coincides with the slower-than-expected recovery of China's economy since the lifting of Covid-19 restrictions. China's feminist movement has grown stronger as more women enter the workforce, and consumers are becoming more conscious of their expenditures. Some women in China feel they already bear additional costs due to gender biases and societal expectations. Two major e-commerce platforms, JD.com and Taobao, faced backlash for their annual shopping events targeted at women, with critics accusing them of manipulating women into spending money. Despite the pushback, some merchants have reported slower sales growth for products aimed at women. Feminist consumers in China are determined to support brands that are fair and respectful to women and believe that their efforts can bring about change [f0dd1269].

The $500 billion livestream shopping market in China, which was created during the pandemic, is now starting to mature. Influencers, brands, and retailers have flocked to apps like WeChat and Douyin to sell a wide range of products. Livestream shopping took off during the pandemic when people were unable to go to physical stores. Initially, influencers dominated the livestreaming space, but later, brands and companies started their own channels. The industry has become crowded, and the overall economy in China has slowed down, leading to a decline in impulsive online shopping. Livestreamers are finding their job more difficult, as they have to talk for hours, act passionate, and be persuasive. The profession has matured, and the dream of getting rich overnight has burst. American consumers may take time to adopt livestream shopping habits, as retailers in Western countries have not yet developed the practice of lowering prices for livestreams. The future of livestream shopping in the US remains uncertain [c16492be].

The buzz around China's Singles' Day sales event seems to have faded this year as consumers choose not to spend as much as before. The event, which marks its 15th year, is experiencing fatigue rather than excitement. The decline in consumer enthusiasm is reflected in the decrease in peak searches and social media discussions about the sales. A survey shows that only 53% of shoppers were excited about Singles' Day, compared to 76% in the previous year. E-commerce platforms attempted to hype up the event through price wars, but this put pressure on merchants. Alibaba and JD.com did not disclose overall sales figures for the event. Weak domestic demand is also reflected in macroeconomic data, such as the decline in the Consumer-Price Index and the Producer Price Index. The rise of 'reverse consumption' and 'seniors-tag-along consumption' indicates a declining economy and high unemployment affecting young consumers. The phenomenon of involution, where industries compete for already scarce resources, has also impacted the consumer market. The decline in Singles' Day sales highlights the need to stimulate domestic demand beyond e-commerce platforms [b7260de1].

Apple is offering unprecedented price cuts in China as big brands and retailers launch promotions for the annual '618' shopping festival. The discounts come at a time when Apple is facing competition from Chinese smartphone manufacturers and declining market share in China. The company is slashing prices of some of its smartphones on Tmall by as much as 23% until May 28. Apple hopes to boost its sales during China's second biggest online shopping event of the year. Apple's market share in China has declined to 15.7% in Q1 2024, compared to 19.7% a year earlier. Huawei, on the other hand, saw sales surge 70%. The price reductions make Apple's iPhone 15 models fall into the same price range as smartphones made by Xiaomi and Huawei. The price cutting has become so brutal that some companies are boycotting the event. More than 50 book publishers have issued joint statements saying they will not participate in the shopping festival due to aggressive pricing policies. The 618 shopping festival is a key barometer of consumption in China and has seen growing competition among e-commerce sites and retail brands to offer discounts [7dc2bde9].

Amazon is launching a discount shopping section in an effort to broaden its 'Made in China, sold on Amazon' community. The new online budget marketplace will feature non-branded fashion items, household goods, and daily necessities shipped directly to consumers from warehouses in mainland China. Chinese merchants have responded positively to the program, which allows them to set their own product prices. Amazon's move is seen as an attempt to compete with discount-shopping platforms like Temu, Shein, and TikTok Shop. However, analysts believe it will be challenging for Amazon to win over consumers from these established platforms. Temu and Shein have been successful in the US market, with Temu topping the download charts in 2023. Amazon's pricing flexibility may attract suppliers who have worked with these rival platforms. The company aims to maintain profitability by leaving pricing in the hands of sellers. It remains to be seen whether Amazon can successfully transition to a low-cost model and compete with the established players in the discount-shopping segment [f943af02].

Microsoft defended its request for all mainland China-based employees to use iPhones at work, citing the absence of Google's Android services in the region. The move is part of Microsoft's global cybersecurity initiative and requires employees to verify their identities through Microsoft Authenticator and Identity Pass apps, only available on Apple's App Store and Google Play. Microsoft employees currently using Android handsets will be given an iPhone 15. The decision has faced backlash from patriotic Chinese social media users who prefer local brands. Microsoft's switch to iOS devices highlights the challenges faced by multinational companies operating in a bifurcated global technology system [1cbce1b9].

Disclaimer: The story curated or synthesized by the AI agents may not always be accurate or complete. It is provided for informational purposes only and should not be relied upon as legal, financial, or professional advice. Please use your own discretion.