Domestic brands use home advantage in China smartphone market

China Telecom displays its mobile phones at the Tianjin International Mobile Phone Industry Exhibition and Forum in May. (File photo/Xinhua)

Thanks to their low-price strategy, China-made smartphones have registered phenomenal shipment figures in the first half this year, snapping up 40% of domestic market share. The success of the pricing strategy is due in part to the subsidies of telecom carriers.

Statistics from the China Academy of Telecom Research under the Ministry of Industry and Information Technology, show that in the first half this year, shipments of mobile phones in China hit 200 million handsets, including 94.855 million smartphones.

According to Beijing Business Today, industry insiders estimate that shipments of mobile phones in China may surpass 400 million this year thanks to unprecedented replacement demand, mainly for smartphones.

In contrast to the dominance of Apple and Samsung in the global smartphone market, indigenous brands account for 43.3% of China's smartphone market, followed by Samsung with 22.2% and Apple with 7.1%. Domestic brands boast lower prices, convenient sales channels and increasingly complete after-sales service.

Leading internet firms have intensified the competition in the smartphone market. 360buy.com, which specializes in mobile phone sales, recently rolled out the Android-based "Small Pepper" smartphone at a price of only 699 yuan (US$110). With their rapid response to the market and solid understanding of the preferences of local consumers, domestic brands have surpassed international brands in tapping the rapidly expanding market.

Domestic brands also owe their rapid emergence to the enthusiastic support of telecom carriers. After several rounds of sales campaigns for smartphones in the 1,000 yuan (US$157) bracket, mobile phone makers have teamed up with carriers to push sales of smartphones even lower. Beijing Telecom has slashed prices of five mainstream smartphones from 1,000 yuan to 790 yuan (US$125) and offered 990 yuan (US$150) of credit into the bargain. Sales of Huawei's C8812 phone through Beijing Telecom hit 1 million units in just five days after its launch.

Elsewhere, however, telecom giants China Telecom and China Unicom have begun to cut subsidies for domestic brands due to their declining profits. China Unicom used to offer a 50% subsidy for smartphones in the 1,000 yuan bracket but plans to lower the subsidy to 20%-30%.