A worker tests smartphone glass cover at a Lens Technology Co Ltd plant in Liuyang, Hunan province. The Apple Inc supplier is targeting Chinese phone makers to shore up its sales. )Photo/China Daily)
Apple's sales woes are forcing hurt Chinese suppliers to explore alternative clients
Chinese suppliers of components and parts to global tech majors such as Apple Inc are seeking to redefine their businesses in order to stay alive.
Realizing that over-reliance on big clients could prove detrimental to their interests, they are forging fresh tie-ups with multiple clients across sectors.
The change in strategy follows the 13 percent year-on-year drop in Apple's January 27-March 26 revenue, or its fiscal 2016 Q2 earning, which hit the tech major's Chinese suppliers hard. It was the first quarterly drop in 13 years as sales of Apple's iPhones slipped 26 percent in China to $12.49 billion.
Consequently, revenues of Lens Technology CoLtd, which supplies glass covers to Apple, slumped 36 percent year-on-year to 2.7 billion yuan ($410 million) in the same period while its profit fell 59 percent to 165 million yuan.
Lens Technology is now cooperating with domestic smartphone brands and also tapping the automobile industry.
The company said it will systematically improve its existing equipment, build a large number of plants and increase R&D expenditure.
The Hunan-based company, which listed on the startup board of the Shenzhen Stock Exchange in March 2015, also plans to reduce the stakes held by its senior executives. Ten shareholders will offload about 737,500 shares from May to December.
This could be construed as a response to its shareholders' meeting in 2015. There, Zhou Qunfei, founder and chairwoman of Lens Technology, heard complaints that she is not interested in cooperating with domestic brands and allows the company to depend excessively on tech giants such as Apple and Samsung Electronics Co Ltd.
Some 48.6 percent of Lens Technology's revenue in 2015 came from Apple whose performance directly affects its suppliers.
Apple's woes were part of a larger trend. Shipments of smartphones worldwide in the January-March, marked the smallest year-on-year growth on record, according to a report released by the research company International Data Corp.
