[China] Approximately 100 firms competing in China smartphone market


China's smartphone market has been seen as a market with great potential for growth. Many firms from different industries have been eager to obtain market share. There are currently around 100 firms competing in the market, according to industry sources.


Recently, China white-box handset firms have been trying to obtain market share by introducing own-brand low-priced products. In addition, major brands such as Apple and Samsung continue to expand market share in the high-end smartphone market, while domestic mobile phone firms such as Coolpad and Huawei have been strengthening distribution channels to prevent products getting caught up in price competition.


The rapid development of China's smartphone market have been pushing many white-box handset firms in coastal regions to declare bankruptcy. Nevertheless, newcomers have been pouring in, including Web portal firms Alibaba, Sina and Tencent.


One of China's three main telecommunication firms, China Unicom, introduced smartphones priced around CNY1,000 (US$156) in the second half of 2011. This strategy quickly attracted many firms to follow suit. In 2012, the cost of smartphone hardware components has been falling rapidly pushing upstream chip supply into a buyer's market. Even small brands that provide single products have been able to lower production costs below CNY500. This has pushed tier-one mobile phone brands to aim at building a strong brand to achieve product differentiation.


Industry sources believe in the next 2-3 years, white-box smartphones will become obsolete as consumers look for high-end smartphones.


Local mobile phone brands have been setting up retail outlets in tier-two and three cities in China to secure distribution channels in order to compete with international brands, added industry sources.


Source: Digitimes