bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

urlAlias

moreOnThisArticles

sponsorType

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Coco Feng

China's move to devalue the yuan may harm foreign brands targeting Chinese consumers, but could be a boon for domestic smartphone makers looking for overseas growth.
The People's Bank of China pushed the yuan down nearly 2 per cent against the US dollar on Tuesday, the biggest drop in more than 20 years. The bank followed this with a further decrease on Wednesday.
The move sent stock in Apple falling as analysts expressed concern that it could cause iPhone prices to rise in China, one of the US firm's key markets.
A weaker yuan may prove beneficial for China's domestic smartphone brands however.
"[Devaluing the yuan] will reduce our exchange loss and promote our export business," ZTE global spokesman David Dai told the South China Morning Post.
In 2014, ZTE suffered 590 million yuan (US$91.8 million) in exchanges losses, or almost 17 per cent of the company's total profit. That amount may fall if the yuan continues to be devalued.
Chinese companies will also benefit if the weaker yuan forces foreign smartphone brands to lower prices or risk market share.
While Xiaomi recently regained its position as China's top smartphone maker, Apple dominates the higher end of the market, with prices far above that of domestic brands. Research firm IDC said in April that the iPhone 6 had pulled up the average selling price of smartphones in China by around 35 per cent.
In a research note this week, Essence Securities said that the yuan devaluation could have several benefits for Chinese manufacturers that export to overseas markets. Their products can be priced lower, they will suffer less exchange loss, and overseas revenue will be higher calculated against the yuan.
ZTE generate around 50 per cent of its revenues from overseas in 2014. Other Chinese smartphone makers, including Lenovo, Huawei and start-up OnePlus, also primarily target foreign consumers.


Currency strategist expects China’s central bank to intervene as yuan weakens for seventh day

Yuan’s gains an opportunity for China’s central bank to push reform, not a matter of concern

No tears needed for forex losers as the People’s Bank goes about its job with the yuan

China Southern Airlines posts 35pc rise in net profit for 2016

China yuan devaluation 2015

Weaker yuan could be great for Chinese smartphone brands like ZTE even as it hurts Apple

ZTE's Axon device unveiled in New York last month. A weaker yuan could help Chinese smartphone brands targeting the US market. Photo: Xinhua

Tech

Enterprises