China is the world’s largest mobile market, and thus is a real treasure trove for phone companies, especially those specializing in smartphones. In the country, where nine out of ten handsets sold are smartphones, opportunities for profit are enormous. That’s what Apple thought anyway, but their expectations were not met by reality.
According to the latest data, there are more than 750 million Chinese online. What’s more, Wall Streetanalytics predict 450 million smartphone users by 2014. In such a favorable setting, it is in the interest of companies to apply all their efforts to deeply penetrate the market and gain the largest number of consumers possible.
However, this is China and the nation works differently than the US, Europe and all other countries, and there are a few things that need to be taken into consideration when entering the market. So what are the essentials for a successful performance in the smartphone market in China?
There are several distinctive features. First, when it comes to price the Chinese prefer to pay less. In a country that loves bargains, people try to achieve the best bang for their buck, and will search out alternatives if they are available. As far as smartphones are concerned, there are a vast number of alternatives that exist, particularly with regards to domestic products.
Chinese consumers want it all: high quality, low prices and nice features. Chinese smartphone manufacturers are able to provide that, so in many cases consumers choose a domestic product.
Considering these differences, Apple launched the iPhone 5c to meet the needs of Chinese consumers. It’s been touted as low-end, and full of bright and shiny gadgets to attract Chinese consumers, and increase the Asian profits of the company. Surprisingly, Apple seemed to make a mistake with the product and it has not been a success. What went wrong?
A number of articles emphasized the unjustified expectations of the product, while others focused on the high cost (only $100 lower than the previous version) and the fact it offered little technological improvement. The Daily Mail points out that the nine million in sales which were achieved during the first three days of the launch. However, the figure has stayed pretty much the same since then. Not the best performance.
As a result, Apple has had to halve production of its new line and focus its efforts on the 5s model.
Domestic companies have, in turn, increased their profits, leaving Apple far behind. As CNTV put it: “Apple’s loss is Chinese brands’ gain”. The ‘dark horse‘ of the Chinese smartphone market, Apple has been overtaken in the world shipment numbers by Lenovo, Yulong, Huawei, ZTE and Xiaomi – all Chinese companies. Combined these companies make up the largest share of the world’s smartphone shipments, sharing 20 per cent of the global market.
More and more, Xiaomi has become the talk of the town, and many see the company as a Chinese Apple. Expectations of Xiaomi’s products in China now surpass those of Apple’s.
Chinese domestic companies are successfully managing to provide the country’s consumers with solid smartphones for advantageous prices, leaving little space for foreign companies to compete. The question is, if China conquers the international smartphone industry, how far will it go and how successful can it actually be? These are difficult questions to answer and for now we can only make predictions.
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