China, a Smartphone Powerhouse: Xiaomi, Huawei, ZTE to Challenge Samsung, Apple Inc.

Published By : 25 Nov 2015 | Published By : QYRESEARCH

The global telecommunication and wireless sector is undergoing lot of changes as Chinese smartphone manufacturers begin to exercise international power and challenge market leaders such as Samsung and Apple Inc. ZTE, Huawei, and Xiaomi are developing fast to challenge the global leaders in the telecommunication and wireless sector. As per recent reports presented by CounterPoint Research, 9 out of 12 smartphone manufacturers are based in China and they collectively account for more than 1/3rd of global smartphone market, which is a huge boost for the China smartphone industry. Smartphone manufacturers such as Xiaomi, ZTE, and Huawei have benefited from the growth initiatives taken by the government of China over the past few years. 

The question here is, whether these vendors will be able to maintain their position in the cut throat competition in coming few years. For many years, the Chinese smartphone manufacturers have enjoyed lot of competitive benefits. For instance, many of the vendors have managed to take advantage of the government support and utilize smartphone manufacturing infrastructure in Shenzhen, a city that fulfills the needs of electronics makers. Beijing also offers environmental standards, tax breaks, and relaxed labor to the smartphone makers. While companies such as Sony and Samsung are able to easily source components for their devices, they also have overhead including legacy infrastructure, employee number, and marketing budgets. 

Startups such as OnePlus are comparatively lean. Carl Pei recently stated that the company doesn’t burn lot of money and so they don’t need to sell many phones. OnePlus sells its smartphones to the consumers directly, so its channel costs vary, which might be around 20% of the margins. As China smartphone market has become saturated, the question arises whether the new smartphone manufacturers can compete with the established names. But brands such as Xiaomi, CoolPad, ZTE, Huawei, and Vivo are becoming recognizable to the population in the U.S. These new smartphone companies are now becoming brands and are selling more number of smartphones than the established ones.

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