The current economic slowdown in China has prompted most consumers to refrain from upgrading their smartphones which is making it difficult for its retailers to score on sale growth.
Despite this, major strides have been made by domestic brands led by Huawei and they have been able to attract and convince customers with offers of top of the line phones with latest hardware and innovative features in the price range of $500-$800. This has resulted in a loss of share in the market for Apple Inc. and the US iPhone maker being forced to reduce prices for iPhones sold by Chinese retailers.
“Of those people who are upgrading, there are many switching from Apple to Chinese brands but very few switching from Chinese brands to Apple,” Jiang Ning, a manger of a Xiaomi store in the northern province of Shandong, reportedly was quoted in the media to be saying.
Value-for-money devices was once the trump card for Huawei Technologies Co Ltd, Xiaomi Corp, Oppo and Vivo to gain market share in the world’s biggest smartphone market at one point in time. But they have been forced to undertake a strategic rethinking because now but consumers are demanding better phones.
“People are more attached to their phone than ever and have higher expectations for the function and experience it offers. The response has been constant upgrading of hardware specs,” Alen Wu, global vice president at Oppo, told the media in an interview.
The love of Chinese consumers for selfies and importance attached to consumer quality is prompting many consumers to shift loyalty from Apple to Huaei, said He Fan, CEO of Huishoubao a fir4m that deal in buying and reselling used phones. Since 2016, there has been a partnership between Huawei and German camera maker Leica.
“Huawei’s cameras have become noticeably better than Apple’s in that they suit the tastes of Chinese consumers more,” he said.
Huawei’s P20 Pro device boasts three rear-facing cameras, with the additional one improving zoom capabilities compared to dual-cameras common in most smartphones, Huawei’s P20 Pro device boasts three rear-facing cameras, with the additional one improving zoom capabilities.
In contrast, the share of Apple in this segment dropped 81.2 per cent to 54.6 per cent and its Chinese was further hurt by its higher end launch of the iPhoneX series.
“Most Chinese smartphone buyers are not ready to shell out beyond $1,000 for a phone,” said Neil Shah, research director at Counterpoint. “This left a gap in the below-$800 segment, which Chinese vendors grabbed with both hands.”
According to data from research firm Canalys, there was a 10 per cent growth in 2018 in shipments of phones priced above $600 in China. In comparison there was shrinkage of 14 per cent in the overall market in the second consecutive year of shrinkage.
Earlier this month, a number of large retailers in China simultaneously cut iPhone prices for a second time this year which underscored the weakness of Apple in China. For Apple, fewer consumers for its iPhones means that it would have lesser number of consumers for its App Store and media streaming services.
(Adapted from EconomicTimes.com)