The future of mobile devices is foldable, and that is really bad news for Apple (AAPL) - Get Report .

Huawei revealed its foldable Mate X ahead of the Mobile World Congress in Barcelona. The jaw-dropping 5G device should have Apple managers shaking in their boots.

Apple investors should worry, too. China may be lost.

The $825 billion company based in Silicon Valley has been designing expensive, aspirational technology gear for decades. The business model involved carefully rolling out cutting edge products to key markets, then waiting for consumers to come. It worked. In North America, Europe, Australia and Japan, demand for iPhones, iPads, Macs and watches fueled a very profitable business.

In 2009, Apple managers turned east, toward China. Rapid growth in middle-income families and legions of affluent Chinese fostered a huge black market for Apple goods. The timing was right. Reuters reported in 2014 that CEO Tim Cook told analysts Apple was investing "like crazy" in China. By the end of 2018, the country had 50 stores, by far the greatest number in a single country outside the United States.

As other markets reached saturation, Cook bet the business on China. He wagered Chinese demand would fuel hardware sales growth, but he missed the ascent of Huawei.

The Shenzhen company is killing Apple in China. It had 9.6% market share when Cook started investing like crazy. Apple commanded 10.1%. In the final quarter of 2018, Huawei sold 30 million devices domestically, according to a research note from Canalys. Market share soared to 27%. Apple's share fell to just 9%, following a 13% decline in shipments.

The reason for the ascent is simple: Huawei makes superior devices, tailored for the home market. And that puts Apple in a world of hurt.

Critics will argue the Mate X, in all of its foldable splendor, is a gimmick. At $2,600, it's an outrageously expensive device loaded with cutting-edge technology nobody asked for. Fifth generation wireless networks have not been deployed. And while larger screens are great, there is no demand for Android tablets, let alone ones with flimsy, untested plastic screens.

This misses the point. Apple is getting walloped in China because it is losing the innovation race. Wired argued last October that the Mate 20 Pro, Huawei's flagship smartphone, is the device Apple should have made.

Mate X is a kill shot. It's the device Apple can't make. Its price positions it atop the market.

When flat, the device sports a beautiful high-definition 8-inch screen with virtually no bezel. When folded, Mate X is a 6.6 inch, edge-to-edge smartphone. There is no unsightly notch, or holepunch to house the front-facing camera. All of the Leica branded lenses are on the back. Flip the phone over to snap selfies, with the benefit of a third, 6.4-inch viewfinder screen.

Everything is powered by Huawei's Kirin 980 processor and a Balong 5000 5G modem. The company said users will be able to download a full HD movie in three seconds.

In every category, it's an impressive onslaught of engineering.

Don't expect Cupertino's vaunted ecosystem to save the day. In most of the world, the iOS user experience is paramount. Apple Music, the App store and iMessage spin off cash flow and keep users loyal. But in China WeChat is the ecosystem. Users can read the news, pay bills and hail taxis. They can buy clothing and order food online. They can even interact with local street vendors.

Ben Thompson, an independent strategist, pointed out in 2017 that WeChat is a big problem for Apple in China. It's much worse today.

I'm not arguing Apple is doomed. I expect Apple stores from Boston to Sydney to London to bustle with loyal customers. They will consume ever increasing amounts of Apple services. And it will not be nearly enough for the company to grow.

Apple is a hardware company. The business model is built to excel in China, but it is failing. Huawei is the innovation leader and it has the most exclusive product.

Mate X isn't going to sell 100 million units. It is probably too expensive and too fragile. That's not the point. Its polish reinforces Huawei's claim of best in class. That will play well at home.

Apple shares trade at 13.5 times forward earnings, and 3.1 times sales. While that isn't expensive, I doubt its problems in China are in the rearview mirror. The stock is up from the lows at $142 set in early January. Investors should expect a test of that level over the next few months, which would mean the potential for at least an 18% decline.

Apple is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.

To learn more about Jon Markman's recommendations at the crossroads of culture and technology, check out his daily investment newsletter Strategic Advantage. To learn about Markman's practical research in the short-term timing of market indexes and commodities, check out his daily newsletter Invariant Futures.

Jon D Markman does not own any stocks mentioned in this column.