In 2010, China smartphone companies such as Huawei,Lenovo,Coolpad, Huawei, Xiaomi and ZTE only accounted for 8 percent of the global smartphone market. Last year, however, they accounted for more than 20 percent according to global research firm Strategy Analytics. China is gradually transforming its past market that used to produce cheap products into premium mobile market. Their success in mobile market is partly due to the slow growth in advanced countries and the rise of China’s purchasing power. With their rapid growth, Chinese smartphone companies became a huge threat to Korean companies such as Samsung and LG.
Although Samsung maintained the top spot with a 20 percent market share in the world’s second-largest economy last year, Huawei and Lenovo, in particular, have shown outstanding performance in the Chinese market.They have made profits in their domestic market, huge investments in research and development over the past three years.
Huawei, the world’s third-largest smartphone maker, following Samsung Electronics and Apple, is looking to boost sales of its premium handsets by spending over 10 percent of its revenue on R&D, and investing $300 million in global marketing this year.
Lenovo, which has so far focused on rolling out low-end handsets, is also seeking to introduce high-end mobile phones. Lenovo acquired Motorola’s Mobility unit in January and has about 5000 patents that can be used for mobile technology development.
China’s LTE smartphone shipments are expected to reach 360 million units by 2018, accounting for 80 percent of handsets in the market, according to Strategy Analytics.
By Shin Ji-hye (shinjh@heraldcorp.com)
If Chinese manufacturers take control of their home markets, like is indicated in this blog, it would spell terrible new for companies like Samsung. To combat this, Samsung must begin to develop better products and/or sell them for far cheaper. This shift in the mobile market will be interesting to follow over the next five years considering the growth in market share of Chinese companies in the past 5 years.
This is very bad news for Apple, because it means that they will have only a small slice of the Chinese market – surely the biggest one for smart phones. It also means that Chinese firms will be well positioned to offer less expensive, less feature-laden smart phones that use one-generation-old screens and chipsets. There’s little market for such phones in the US, or maybe I simply don’t recognize what constitutes the “value” segment. But there is everywhere else. That’s also bad news for Apple – rather than offering it at a lower price-point, Apple has removed the “4” from its web site, and it’s not featured prominently at other retailers…
This definitely connects to what we discussed in class. The emergence of this new Chinese middle class is changing the economic landscape of China as well as the world. The existence of these millions of new consumers is able to boost up and skew numbers in any marketplace. The Chinese phone manufacturers now have almost unlimited access to these new consumers right on their doorstep. This race to “own” the Chinese smartphone market will be interesting. While some of these middle class Chinese will be fine having Lenovo or Xiaomi phones, some will want the western, status symbol iPhones from America.