Patriotism Erupts Across China As Consumers Ditch Apple For Huawei

The escalating trade war is starting to damage Apple's brand in China, according to a new survey of Chinese consumer trends. 

The brand consultancy Prophet surveyed 13,500 Chinese consumers and discovered that a wave of nationalism is sweeping across the country, deterring many from using US brands. 

Apple plunged in the company's latest brand-relevance index, published Wednesday, which asked respondents which brands they liked the most.

Apple crashed to No.24 in the index, falling from No. 11 last year. Before the trade war began, Apple was No. 5.

Rivals like Huawei soared in the index to the No. 2 spot, just behind Chinese payment service Alipay.

The survey suggests that increasing nationalism in China could kill US brands, especially if the trade war continues into the early 2020s. 

Calls for boycotting US brands have already circulated onto social media platforms in China, reaching millions of consumers who believe that it's their patriotic duty in this economic war to buy Chinese, not US.

Prophet said when President Trump started attacking Huawei, banning products in the US and restricting its access to specific global markets. The Chinese people took notice and abandoned iPhones for Huawei smartphones. 

Jay Milliken, senior partner in Hong Kong with Prophet, elaborated more on how it was, in fact, President Trump's ban on Huawei products that helped spur patriotism in the country to buy only Chinese products. 

"There's a lot of nationalistic buying in that category, because Chinese consumers interpreted what happened to Huawei as an attack," he said.

The survey determined Chinese patriotism extended across many brands, not just Huawei. Sportswear maker Li Ning Co. nearly overtook Nike in the rankings.

Milliken said there were only two US brands in the top ten list this year (Android at No. 3 and Intel at No. 9), compared to five before the trade war. 

Some US brands are "integral in the lives of Chinese consumers," Milliken said, adding that "There are no Chinese alternatives, so those remain super relevant."

Melissa Guzy, a managing partner at Arbor Ventures, recently told Business Insider's Troy Wolverton, that the wave of nationalism "isn't temporary. It's a long-term shift that's happening." She continued: "I think most Chinese don't believe they need the US for anything."

And while Apple beat its latest earnings report, disappointing numbers continued to print from Asia: China revenue came in at $9.16BN, down 4.1% Y/Y. 

The full breakdown by geography is as follows:

The expanding boycott of US products in China is nowhere close to being over, and the trade war could soon morph into a tech war that will continue to spur Chinese consumers to ditch Apple for Huawei. 

And judging by the latest search volumes - after the "huge" release of iPhone 11 - things are not looking up for Tim Cook...

We're gonna need more buybacks to support that stock price.