{"id":2042,"date":"2020-01-06T07:18:40","date_gmt":"2020-01-05T23:18:40","guid":{"rendered":"https:\/\/daxueconsulting.com\/?p=2042"},"modified":"2023-03-02T02:15:19","modified_gmt":"2023-03-01T18:15:19","slug":"smartphone-market-in-china","status":"publish","type":"post","link":"https:\/\/daxueconsulting.com\/smartphone-market-in-china\/","title":{"rendered":"The smartphone market in China: Still largely untapped"},"content":{"rendered":"\n

The total number of Chinese smartphone users has reached 748 million in 2019<\/a>. Approximately 53% of the population<\/a> uses smartphones, leaving much of the smartphone market in China untapped. This number is expected to reach 868 million by 2023<\/a>. With the sudden prevalence of smartphones in China, smartphone user habits are different in China from rest of the world. <\/p>\n\n\n\n

Chinese consumers\u2019 dependence and use of smartphones<\/a> is much different from laptops<\/a>. China’s fast technological development skipped over the laptop era, many Chinese consumers\u2019 first ‘computer’ purchase was a smartphone. Chinese mobile users spend most of their time on social networking apps, watching short videos, taking pictures, and playing games, according to a study by Zhongjin<\/a>.<\/p>\n\n\n\n

How WeChat makes Chinese smartphone consumption\nmore malleable <\/h2>\n\n\n\n

In addition, Chinese APPs like WeChat and\nAlipay are so powerful and omnipotent that consumers in China do not\nnecessarily have to be loyal to a specific operating system. WeChat has replaced phone calls and SMS\ntexts, so when consumers switch phones, they do not have the need to keep the\nsame operating system. So long as they can download WeChat, all their contacts\nare saved, and accessible from any phone.<\/p>\n\n\n\n

WeChat\u2019s feature \u201cMini\nProgram<\/a>\u201d enables its users to access APPs within WeChat without having to\ndownload them. So far, WeChat Mini Programs own over 200 million daily active\nusers and provides a wide range of services that cover people\u2019s day-to-day\nneeds. This gives Chinese consumers more freedom when purchasing smartphones or\nswitching smartphone brands from one to another and poses more challenges to\nsmartphone companies. <\/p>\n\n\n\n

Leaders of the smartphone market in China<\/h2>\n\n\n\n

While faced with fierce <\/a>competition from Apple and local Chinese smartphone companies like Xiaomi, Vivo, and Oppo, Huawei<\/a> still owns the leadership in the Chinese smartphone market with a market share of 39.80% by the 3rd quarter of 2019. Apple\u2019s sales keep declining, but the company still takes up to 8.2% of the market share. Unfortunately, companies like Samsung and HTC have dropped out of the chart of top companies on smartphone consumptions in China.<\/p>\n\n\n\n

\"Smartphone<\/figure>\n\n\n\n

Data Source: Canalys, Only Apple is foreign, the other top five smartphone brands are domestic<\/em><\/p>\n\n\n\n

By the 3rd quarter of 2019, the smartphone penetration rate in China has reached approximately 53%<\/a>, which is a huge leap as compared to 40% in 2012. China has already taken the title as the world\u2019s first country to chalk up over 1.1 billion<\/a> 4G mobile users, with still hundreds of millions expected to upgrade to Smartphones over the coming years. Although the Chinese smartphone market has been gradually approaching saturation in the past few years, the arrival of 5G will bring new opportunities and challenges to smartphone makers like China\u2019s giant tech company Huawei, Apple (\u82f9\u679c) and other local Chinese smartphone companies. <\/p>\n\n\n\n

Huawei smartphones in China<\/h2>\n\n\n\n
\"Huawei<\/figure>\n\n\n\n

[Source: Baidu \u2013 Huawei\nsmartphones in China<\/em>]<\/p>\n\n\n\n

Huawei has come a long way since its\nestablishment in 1987. In 2019, the Chinese tech giant\u2019s smartphone business operates\nacross the globe, covering over 170 countries and regions. Huawei launched its\nfirst Android smartphone U8220 in 2009 and created its own smartphone series\nHuawei Honor in 2013. Other Huawei smartphone series include Mate, Nova, P, and\nMaimang, which were designed and priced to appeal to different market segments.\nAt the Huawei Developer\nConference 2019<\/a>, Huawei officially announced the launch its own operating\nsystem, the HarmonyOS, as part of Huawei\u2019s project \u201cInternet of Things<\/a>,\u201d followed by which, Google stopped\nits collaboration with Huawei as its response to Huawei\u2019s ambitious move. <\/p>\n\n\n\n

Apple\u2019s iPhone in China<\/h2>\n\n\n\n

The iPhone is a line of smartphones designed and marketed<\/a> by Apple Inc. The first iPhone was unveiled by Steve Jobs, the CEO of Apple on January 9th<\/sup>, 2007, and was released on June 29th<\/sup>, 2007. Third-party as well as Apple\u2019s applications are available on Apple\u2019s app store, which launched in mid-2008. As of the 3rd<\/sup> quarter of 2019, over 1.8 million<\/a> apps are available on Apple\u2019s app store, as compared to 500,000 apps in 2012. Traced back to 2012, there were five generations of iPhone models, each accompanied by one of the five major releases of iOS (formerly iPhone OS). The original iPhone was a GSM phone and established design precedents, such as screen size and button placement, that have persisted through all the five models. By 2019, Apple has released 24 different versions<\/a> of iPhone and will announce the launch of iPhone 12 in September 2020. <\/p>\n\n\n\n

Android smartphones in China<\/h2>\n\n\n\n

Android is a Linux-based operating system for mobile devices such as smartphones and tablet computers. It is developed by Open Handset Alliance, led by Google which financially backed the initial developer of the software, Android Inc., and later purchased it in 2005. Android, Inc. was founded in Palo Alto, California in October 2003 by Andy Rubin (co-founder of Danger), Rich Miner (co-founder of Wildfire Communications, Inc.), Nick Sears (once VP at T-Mobile) and Chris White (head of design and interface development at Web TV). Despite its humble start, Android takes up approximately 74% of the smartphone market in China from 2013 to August 2019. In 2019, Google officially announced the launch of Android Q (also called Android 10) for its Pixel smartphones, which was considered as a refreshing and innovative move of Google. <\/p>\n\n\n\n

iPhone VS Android smartphones\nin China<\/h2>\n\n\n\n

Apple Inc\u2019s declining share of the smartphone market in China suggests that its customers won\u2019t always wait for the next iPhone when rivals, such as Huawei and Xiaomi, have plenty of flashy new models available in the Chinese smartphone market. According to Bloomberg, Apple\u2019s sales from greater China<\/a> (includes Taiwan and Hong Kong) dropped 27% during the holiday season this year in its second-largest market as compared to last fiscal year. This means that other companies like Huawei, Xiaomi, and Vivo have been eating up Apple\u2019s market share in China with fairly high speed and Apple\u2019s target consumers have fewer needs for upgrading their iPhones every year. Although iPhone 12 will be launched in September 2020, Apple seems to be stuck at its bottleneck with few innovations on its recently released products. Additionally, as mentioned earlier in the article, Apple\u2019s major rival Huawei hasn\u2019t stopped taking innovative steps. Its newly released software platform \u201cHarmonyOS\u201d will replace Android on Huawei smartphones, which made it not only Apple\u2019s biggest rival and all Android smartphones rival as well. Therefore, it is possible that Apple would lose its status as the must-have accessory for China\u2019s hip and rich.<\/p>\n\n\n\n

Future Prospects: Will the dawn of 5G reshape the smartphone market in China?<\/h3>\n\n\n\n

Chinese smartphone companies have been trying to get out of this very awkward position where they are not competitive enough to be in the high-end market<\/a> but reluctant to stay in the low-end market for long. Unlike Apple who targets high-end consumers in China, Chinese smartphone companies including Huawei, Xiaomi and Vivo, have been taking a different pricing strategy with fairly low profits in order to penetrate lower-end demographics in China. However, as the arrival of 5G, these companies might seize the opportunity to re-position their brands. <\/p>\n\n\n\n

Author: Isabella Li<\/p>\n\n\n\n

Additional Sources:<\/strong><\/p>\n\n\n\n