The CEO personally checked the new team, and Samsung's return to China to grab the market is serious

Author | Yuan Silai

Edit | Su Jianxun

After losing the Chinese market for many years, the news of Samsung's return has once again been refreshed.

According to South Korean media reports, Samsung set up a new China team to report directly to co-CEO Han Zongxi. The division, named the China Business Innovation Team, is involved in not only mobile phones but also home devices.

At present, there is no further action on the return of Samsung. Samsung has 18,000 employees in China in 2020, down 40% from 2018. Their net sales in China also fell 12.5 percent for the full year 2020, though they still had $31.9 billion. After the decline of mobile phones, Samsung's factories in China have all been shut down, and the domestic business is mainly semiconductor chips and memory.

After the catastrophic event of note 7 in 2016, China became one of the few markets where Samsung failed to recover, and it could not find opportunities under the offensive of domestic manufacturers.

The situation has changed. When Apple began to put down its body, Samsung obviously found a gap in this huge market. Even after years of silence, Samsung's imprint on China has not completely faded. It still sits on the best folding screen, the memory in shipments is second to none, and the chip is also on the vivo high-end machine.

Samsung has its own advantages in the sea of machines, especially in the high-end market has a high enough recognition. When Samsung Electronics' overall focus has been biased towards chips, Samsung still needs the mobile phone business to provide stable cash flow. After the growth of the international market has peaked, China is one of the few markets that still has huge consumption power, and of course, it is also the most difficult to cut into the Red Sea.

Can flex and stretch

0.6%, which is Samsung's market share in China in the second quarter of 2021.

If you look at the world, even if the iPhone ushered in an upward period, Samsung still had the first global shipment last year, and their folding screen accounted for nearly 80% of the overall shipment, more than 7 million units. This means that if Samsung returns, it is still not an opponent who can be careless.

Domestic mobile phones have wanted to go to the price of more than 6,000, but they have not really made a difference. In September 2021, Liu Bo, vice president of OPPO and president of China, publicly stated, "In the market of more than 4,000 yuan, OPPO's market share is only less than 10%. An industry insider told 36Kr that in the market of more than 6,000 yuan, Apple accounts for 90% of the share.

After Huawei lost power, this high-end battle has actually come to an end, and domestic mobile phone manufacturers have not raised their eyebrows as expected. In fact, as far as hardware is concerned, the high-end machine parameters of domestic manufacturers are not bad. 120Hz resolution OLED screen, hundreds of millions of pixel cameras, 66w fast charging has become the high-end flagship standard. At the press conference, the iPhone 13 Pro is a resident comparison object, and the hard parameters of domestic brands have long been able to keep pace.

This only proves once again how insurmountable the power of the brand is. The marketing industry has brutal data: the long-term market share of the first brand that enters people's minds is usually 2 times that of the second brand and 4 times that of the third brand. Countless failures in the past have proven that it is almost impossible to squeeze out the brand above to occupy the user's mind.

The good thing about Samsung is that it's the only brand that has a place in both the high-end and the low-to-mid. Globally, Apple and Samsung have a share of 57% and 17%, respectively, in markets above $400. The most exaggerated data of the polarization appeared at ultra-high prices, and analysts at Strategy Analytics said that in the first quarter of 2021, ultra-high-end phones above $900 accounted for 25% of global smartphone revenue, with Samsung and Apple dominating the absolute. Among domestic manufacturers, only vivo can get the first place in the 400-499 US dollar market.

Samsung naturally has the advantage of doing high-end, before the Note 7 explosion accident, although Samsung's share has been overtaken by domestic manufacturers, falling to 5 outside, but in the high-end market, it was holding the right to speak at that time.

Samsung is different from Apple, and its momentum of laying out the sea is not inferior to that of domestic manufacturers. In order to fight Xiaomi, Samsung has formulated a "very radical plan", which is actually a price war. They released the M series, made specifically for India, with the first priced at just 7,990 rupees (about 790 yuan). With the cheap M and A series, Samsung maintained its second market share in India last year, and they surpassed Xiaomi in the mid-to-high-end price segment (INR 10,000-INR 30,000).

If Samsung is really willing to spend efforts to rebuild channel relationships and invest a lot of advertising, it may not be impossible to stir up the market.

Dried up channels

In the cold beijing of late 2018, Samsung released the Galaxy A8s. It debuted Samsung's proud black pupil full-screen, Samsung Electronics Greater China president Kwon Guixian said: "With the products released today, we are enough to compete with any brand."

Galaxy A8s piled up three cameras, large memory, the hottest Snapdragon 710 at the time, the price is less than 3,000 yuan. Unfortunately, in the airtight domestic market, Samsung's share still hovers below 1%.

But now there is a gap.

Apple did win the high-end machine market after Huawei's decline, but the channels were actually not so glamorous. According to 36Kr, Apple channels take the price difference of about 10%, the rest mainly rely on subsidies, which and Huawei's profit ratio of more than 16% from the previous, it is difficult to make Huawei's large merchants satisfied.

The model of low price difference + subsidy is destined to make apple channels more messy, outside apple official channels, there are countless dealers who are wandering in the gray and white areas, they will pour goods to the e-commerce platform in order to go more, or reduce prices to get more subsidies. At the beginning of the iPhone 11 sale, the price of the e-commerce platform can be lower by 1,000 yuan.

Apple's price chaos in domestic channels is already a chronic disease, iPhone 12, Apple thought of controlling channels, including boycotting tens of billions of subsidies, strictly guarding online channels, is to stabilize prices.

Xiaomi mainly relies on inventory management and rapid turnover to attract channels, while OPPO and vivo systems are intertwined, focusing on qualifications, relatively closed, and it is difficult for latecomers to share the cake.

Before the collapse of the Chinese market, Samsung was actually a good target. The agent they worked with most was Astar, who once accounted for 70% of Axed's sales revenue, which was also an agent for Apple and Glory. In 2002, when Samsung first entered China, Aishide was a national business. But in 2014, Samsung wanted to do direct sales, and the two stopped cooperating. It wasn't until the S8 was released in 2017 that the two began to work together again. In 2019, Samsung laid off its own mobile phone distributors, returned to the general generation model, and cooperated with Aishtech to open a flagship experience store.

But at that time, when Huawei was in the sky, Samsung's move did not bring any improvement. Huawei is low and backward, there is actually no shortage of high-end machines in the market, Apple's share has soared, and the essence is still the pull of the brand. In this regard, only Samsung in the Android camp has capital.

With Samsung's style of doing things, they will spend a long time researching and getting familiar with this market again. Fortunately, in the short term, its opportunities will not disappear.