Chinese Smartphone Market
China is posing more risks and uncertainties than before to Korean mobile phone and home electronics manufacturers. Specifically, the handset makers are facing Apple’s strong resistance in the Chinese market, which is sure to become the world’s largest LTE market soon, with their dependence on it on the rise. Home appliances makers are increasingly forced to change their strategies as the local demand for high-end products is increasing and more and more energy-related regulations are put in place.
Mobile phone manufacturers like Samsung Electronics, Apple, and LG Electronics are striving hard to increase their presence in advance in the Chinese LTE market. Some industry insiders are pointing out that their increasing reliance upon the market could result in deteriorating business performance with time.
Major Smart Phone Makers Endeavoring to Dominate Chinese LTE Market
According to industry sources, Chinese mobile carriers launch commercial-scale TD-LTE services within this year. Under the circumstances, Apple is poised to catch up with its arch-rival Samsung Electronics by way of an alliance with China Mobile, the number one mobile carrier in the world with over 700 million subscribers. It is said that Apple will supply it with its iPhone 5S and iPhone 5C sooner or later.
Up to now, Apple has supplied its products only to China Unicom and China Telecom, the second and third-largest carriers in the region, and the policy has dragged down its market share there to 4.3% in the second quarter of this year. It was outperformed by Samsung Electronics and even by Chinese manufacturers, selling just 3.4 million units of phones at rank eight in the market during the period.
However, Apple is expected to create a new momentum in China down the road through its partnership with China Mobile. Apple has made strenuous efforts to win over Chinese customers. It has abandoned the closed policy peculiar to itself only in China. CEO Timothy Cook has visited the country several times, and held the launching event for the iPhone5S there, too.
In the meantime, Samsung Electronics, which sold 15.3 million handsets and accounted for 19.4% of the Chinese market during the second quarter of this year, has succeeded in shipping its Galaxy Note 2 to the region and is currently planning to supply other models to local telecom operators, including the TD-LTE version of the Galaxy Note 3. LG Electronics is trying to follow them by supplying the G2, which is expected to become the first flagship model of LG Electronics to be marketed in China.
Possibility of China Risks on the Rise for Samsung and LG Electronics
Their concentrated efforts in China are because of the huge size of the market. At least 289 million smart phones are estimated to be sold in the country in 2013 alone, which is equivalent to 30% of the global total sales volume. In addition, the number is forecast to surpass the 700 million mark in 2016. In the past quarter, Apple sold 45 million less smart phones in the world than Samsung Electronics did and the difference amounted to 12 million units in China alone.
Still, industry analysts are saying that Samsung and LG Electronics’ increasing reliance upon the Chinese market could become a double-edged sword over time. “Samsung Electronics is so dependent on China as to sell more than 20% of its smart phones in China these days,” said one of them, adding, “If it is overtaken by Apple in the TD-LTE race, its sales performance will significantly drop to the point of witnessing a change in market dynamics.”