Retaliation Even against Smartphones
Samsung Electronics is seeking to win back the Chinese smartphone market with the Galaxy Note 8. The company plans to regain the trust of consumers that was battered by the Galaxy Note 7 battery fires and overcome China’s retaliation against South Korean companies over the deployment of the U.S. Terminal High Altitude Area Defense (THAAD) missile system. However, Chinese mass media is pouring negative articles about the Galaxy Note 8 every day, making a diversion.
Preorders of the Samsung Galaxy Note 8 reached 8,310 and 5,292, respectively, at JD.COM and Alibaba's Tmall, the two largest online retail marketplaces in China, as of 2:40pm on September 19. Considering preorders through Samsung Electronics’ official websites and stores, the figure is estimated at over 20,000. Chinese media is eager in criticizing the Galaxy Note 8 by comparing Apple’s iPhone 8 which began receiving preorders around the same time. A Chinese IT news outlet said, “The iPhone 8 received more than 4 million preorders but the Samsung Note 8 received only thousands of preorders.”
However, consumers are required to deposit 100 yuan (US$15 or 17,179 won) to put in a preorder for the Galaxy Note 8 in China. It means that a preorder is highly likely to lead to an actual purchase. A Samsung Electronics official said, “We have introduced the deposit system for preorder in China in order to increase the likelihood of an actual purchase. Preorders of the Galaxy Note 8 are higher than the previous model.” There is no need to deposit money to place a preorder for the iPhone 8.
Samsung Electronics has been struggling in the Chinese market due to anti-South Korean sentiment in China that have been generated since the deployment of the THAAD system as well as the Galaxy Note 7 fiasco. Chinese media and internet users are also knocking off South Korean companies.
A China’s state-run weekly magazine reported, “The THAAD issue is one of big factors that the Galaxy Note 8 is having a hard time in China. The anti-South Korean sentiment made Chinese consumers don’t shop at Lotte Mart nor buy Samsung, LG and Hyundai products.”
The price is another factor. The price of the Galaxy Note 8 in China starts from 6,988 yuan (US$1,061 or 1.2 million won), which is twice as high as the latest Xiaomi Mi Mix 2 smartphone with the price tag of 3,299 yuan (US$501 or 566,735 won). Chinese market watchers say the Mi Mix 2 is equipped with a full-screen display and Snapdragon 835, having performance that gets abreast of the Galaxy Note 8.
According to market analysis firm Counterpoint Research, Samsung Electronics’ share in the Chinese market dropped to 3 percent in second quarter of this year from 7 percent a year ago. The combined market share of Chinese smartphone manufacturers, including Huawei, Oppo, Vivo and Xiaomi, stood at 87 percent, while that of Apple amounted to 8 percent. It is only 4 percent of Samsung Electronics’ total smartphone sales over the same period. It is nearly half when Samsung Electronics sold over 10 million units in a quarter in China in 2013.