Smartphone brands Xiaomi, Huawei lead China market as cheap domestic models overtake Samsung, Apple
Chinese smartphone makers Xiaomi and Huawei led the Chinese market in the second quarter despite adopting divergent strategies as consumers flocked to domestic brands offering quality on par with foreign brands at a cheaper cost.
The two brands accounted for nearly one-third of all smartphones shipped in the three-month period, while Apple dropped to third place, followed by South Korea’s Samsung and China’s Vivo.
Xiaomi, dubbed "China's Apple" for the clone-like nature of some of its products, regained its crown as the China’s top smartphone vendor with 15.9 per cent market share, according to research firm Canalys estimates. Huawei was close behind at 15.7 per cent.
Canalys did not release estimates for the market share held by Apple or Samsung. It is due to release a full report on China’s smartphone market later this week.
“The China smartphone market continues to mature, remaining stagnant quarter-on-quarter. Competition among major brands has never been so intense,” said Jingwen Wang, an analyst at Canalys.
Smartphone shipments actually declined in China for the first time in six years from January to March, according to research firm IDC, although it is unclear whether the drop was a deviation or the start of a downward trend.
“Huawei recorded the highest number of smartphone shipments in its history, without compromising its product margin or profitability,” Wang said.
“Apple and Samsung have both increased their sales activities in the China market, expanding rapidly in channel coverage through flagship stores and small- to medium-size phone retailers, respectively,” he said.
Despite Xiaomi’s lead in China, Huawei surpassed its close rival in global sales.
Data from research firm Strategy Analytics showed that Huawei, China’s biggest telecommunications equipment manufacturer, was the world’s third-largest supplier of smartphones in the quarter ended June 30, behind industry leaders Samsung and Apple.
Huawei shipped 30.5 million smartphones last quarter, up from 20.1 million units in the same period last year, to seize a 9 per cent global share. That compares with 6.8 per cent in the year-earlier period.
“Huawei is expanding rapidly across Asia, Europe and North America, putting competitive pressure on key rivals such as Samsung, Xiaomi, Lenovo, LG, Sony and Alcatel,” Strategy Analytics director Woody Oh said in a report.
Xiaomi moved ahead of Lenovo to become the world’s fourth-largest smartphone supplier. The high-flying tech start-up shipped 19.8 million smartphones last quarter to corner a 5.8 per cent global market share – a modest advance from 5.1 per cent a year ago.
“Xiaomi has good distribution channels and competitive pricing in its home market of China, enabling it to stay in front of Lenovo,” Oh said.
He pointed out that Lenovo, with a 4.8 per cent global market share last quarter, down from 8.1 per cent a year earlier, was “struggling with the transition from 3G to 4G smartphones in China and the United States”.
Xiaomi has grown quickly by selling feature-packed Android phones at a low cost.
In China, it made an art of marketing itself through social channels, building a strong fan base among young Chinese and keeping costs down by selling its phones online.
Chief Executive Lei Jun last year spoke of reaching 100 million shipments this year, but in recent months he has revised down the figure to a more conservative range of 80 million to 100 million.
According to Canalys, Huawei was the fastest-growing vendor in the top ten operators in China, having seen sales jump 48 per cent.
Huawei’s strategy is aimed at moving away from cheaper phones to target the mobile high-life lived by Apple and Samsung, said Richard Yu Chengdong, CEO of Huawei Consumer Business Group.
He said Huawei aims to beat Apple’s sales and performance in China by 2018.
“We will keep innovating to improve our products on a step-by-step basis. This year and next, you will see more new elements in Huawei smartphones,” he said.
Huawei is more profitable than all smartphone makers save Apple and Samsung, he claimed, pointing to the strong sales of models like Huawei’s high-end P8.
“I know many of you have purchased and used an iPhone 6, but our P8 is much better, much better…in battery and functions like taking photos,” he told reporters at a news press in Shenzhen in late July.
“I don’t care much about sales of low-end smartphones. We pay more attention to high-end product sales,” he said.
“High-end products can give users a better experience. Low-end products are more cost-driven, so we can’t use the latest or innovative technologies in them.”
Seeking to expand beyond the cut-throat Chinese market, Xiaomi has undergone a period of rapid international expansion, recently launching its phones in India and Brazil.
Huawei is competing for a bigger share of the market for handsets priced US$400 or higher in Europe and North America.