The Intensified War amongst China’s Low-End Smartphones

11 Jul

China currently has about 1 billion mobile phone users, many of whom are expected to replace their devices at any moment. Given such a high number of active users, it is hardly surprising that affordable, low-end smartphones, in particular those priced at around $1000 CYN, could become such an immensely popular, go-to choice in the country. Local companies such as Huawei Technologies Co. and ZTE Corp., both of which have been manufacturing low-cost handsets since their establishment, are the current leaders of China’s low-end smartphone market.

Considering how easily business entities get caught up on trends, it wasn’t long before other competitors—both local and foreign—entered the scene and began taking advantage of people’s cravings for affordable products. China-based business groups such as Alibaba Holdings Ltd. and Baidu Inc., for instance, have each teamed up with electronics manufacturers to design its own consumer friendly, low cost smartphones. Foreign companies like Samsung and Nokia, on the other hand, embarked on a similar strategy by releasing less luxurious versions of their high-end mobile devices.

During May 2012, Baidu Inc. and TV manufacturing company, Chuanhong, announced that they will be releasing a smartphone which could allegedly be purchased for less than $1000 CYN. A month later, Alibaba Holdings Ltd. and Haier jointly stated that they would be releasing an inexpensive mobile phone at a similar price range.   As more and more locally manufactured smartphones begin hitting retail stores at roughly one fourth the price of the iPhone 4S, various lesser known Chinese brands have been noticed to gain unprecedented attention in the smartphone market. Many perceive this to be a positive development for China’s business prospects, given how increased recognition can help to stimulate the growth and innovation that China’s mobile phone industry sorely needs.

In China, high-end smartphones such as Apple’s iPhone or Samsung’s Nexus series would generally cost consumers around $4000 CYN. Surprisingly, even at such an expensive price, and given the rising popularity of China’s low-cost phones, the dominance of high-end phones still remains unshaken in the Chinese market. The consumer base for the pricier handsets, in fact, is arguably stronger than it had ever been in the past.

The persisting popularity of expensive smartphones could perhaps be attributed to the temptation to display one’s wealth and status in Chinese societies. Regardless, there is little doubt that the market in China will soon be segregated between low priced smartphones and luxurious smartphones. Falling somewhere in between are the “middle-class” Android mobile phones, which is also expected to make an impact in China’s market.

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