Chinese Cell Phone Industry Shuffle again, Rules Will Be Changed in Near Future 

4 comments Wednesday, February 3, 2016

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Chinese cell phone industry is always in constant shuffling. But in the past 2015 year, some changes have taken place in the not-quite cell phone industry, and this time makes a bigger influence, the price influence is reduced, Internet companies join, traditional cell phone brands and Internet phone brand relationship mollified.


Price war is no longer attractive

Future in the domestic market, perhaps there will still have price war, but the battle will not focus on price. Because price war brings a series of consequences, such as cell phone manufacturers with lower profit, as well as a poor reputation due to quality or after-sales problems.  After a period of time of the crazy price war, cell phone manufacturers gradually tasted the bitter fruit, and realize that this is an irrational way.

The result affect not only cell phone manufacturers, but also the supply chain which attached to the cell phone manufacturers, in 2015, a massive failures of supply chain, because the supply chain is based on the needs of cell phone manufacturers for their own production point targets. As a supplier, cell phone manufacturers compete on price, can only select the related parts production and other sectors to drive down costs, the direct consequences of this is the decline in the quality, and ultimately will be reflected in the cell phone manufacturers of machine quality and experience. Thus forming a vicious cycle.

Cell Phone Price War

According to market research firm IDC 2015 report in December found that in 2015 the global smart phone sales growth for the first time below 10%, mainly due to the demand of the Chinese market began to dry up. The report notes that China is becoming a replacement market, the demand of other Asian countries, Latin America and Western Europe is also slow. IDC said that China’s economic growth influence all over the world, China market has become the key smart phone industry. However, IDC continues to believe that China basically has become a replacement market.

Obviously, a simple price war has been difficult to attract the user's eye. In the era of replacement, consumers need is not cheap cell phones, but high quality.

Therefore, it is certain that in the Chinese market, large-scale replacement era has passed, and the growth has been slowing down, price wars and machine sea tactics has been unable to as the key to victory, cell phone manufacturers have to find other ways to strengthen their competitiveness.

Cell phone manufacturers and internet companies complement each other is the trend 

In order to gain a competitive advantage, cell phone manufacturers have moved to "reinforcement", the "reinforcement" refers to Internet companies. In 2015, the cell phone industry competition is not only limited to cell phone, Internet companies also join in for it’s “Cheer” or want to share.

Let’s view several typical cooperation events between Internet companies and cell phone manufacturers. Alibaba Group shares Meizu Technology, naturally Ali YunOS operating system based on bilateral cooperation, the two will work together to create excellent platform for the intelligent terminal products and ecological, currently on the aspect of Meizu is fairly good. Letc shares Coolpad and TCL, Letv cooperation with two companies is mainly because of Letv video resources no other substance resources.Su Ning shares Hammer and Nubia, which Su Ning cooperation with Nubia should be optimistic, because Su Ning has broad online and offline channels, for Nubian further impact sales, achieve closed-loop O2O is a good advantage, but the cooperation between Su Ning and Hammer remain to be seen, because Hammer cell phone sales, technology and brand influence are at a low state. Su Ning selected Hammer because in the future Hammer has the potential to works on the market, but on Hammer’s current performance, this cooperation still need take into consideration.

Although the internet companies and cell phone cooperation is a kind of success or failure there is no conclusion yet, but this trend is unstoppable, in 2016 there would a lot cooperation like this. The key problem is that whether resources can achieve complementary advantages, if only stay in dubious stage, the future failure cross-border cooperation is also no less.

Traditional and Internet cell phone brands become into the competition and cooperation

The brand cell phone between traditional and internet have complex relationships, traditional cell phone manufacturers are standing on the opposite side of Internet companies when it just emerging, both vowing to fight to each other.

As the threshold of phone hardware lowered, internet companies can easily enter the field of cell phone. and because of the effect brought by development of Internet, Internet phone brand in the short term to get good results, on the contrary, hardware manufacturers are not so easy to enter the Internet field. But it is also proved that the internet phone brand actually also does not have the capacity to fatal blow to the traditional phone markets, so the two have been in a state of confrontation.

With the development of the time, the rapid outbreak of the Internet phone brand of criticism gradually revealed, for example Xiaomi innovation has been a marked lack, sales growth has slowed sharply, and Huawei, Lenovo, ZTE and other cell phone companies also against traditional cell phone brands, it is difficult for Xiaomi dominate the market. Internet phone come to realize the limitations of a single online channels, began to pay attention to the offline channels development. For example, in 2015, Meizu has been completed 2000 line to experience store layout.

The traditional cell phone manufacturers are also beginning to embrace the Internet, start the implementation of the sub-brand strategy. Each traditional cell phone manufacturers have launched a sub-brand for the Internet to combat Internet phone brand attack, such as a sub-brand of coolpad ivvi, Honor of Huawei, Nubia of ZTE , IUNI of Jionee etc., it’s more convenient for their own re-positioning.

The Internet companies need the advantages of traditional companies to own padded short board, the two relations from pure competition to the competition and cooperation relationship.

In 2016, the price war between cell phone manufacturers no longer the focus, more focus will be placed on brand building, cell phone manufacturer perhaps will cooperate with internet companies to increase their strength, the competition between traditional cell phone and internet phone will changed from confrontation to cooperation under a competitive.

At present, both traditional and Internet brand cell phone in a critical nodes on brand positioning. Cell phone manufacturers eager to give themselves a clear position, because in the reshuffle, the brand image cell phone manufacturers is specially important. Is there a clear image determines whether in the minds of consumers can have some recognition of the cell phone manufacturers, Obviously, as consumers purchase with more rational choice today, if there is no awareness, it’s difficult to stay tenable among this big reshuffle.

Industry view , Chinese OEMs , Chinese smartphone indsutry , cell phone


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