When the cold wind of 2022 blows away the booming sales of China's low-end mobile phones, the truth is really cruel.
Wen | Yuan Silai
Editor| Yang Xuan
The first night of the 618 mobile phone promotion is not over, and Huang Yiwen has made it clear that even the winner will only "win miserably".
This year's fighting has been unusually fierce. In the last two weeks of May, the press conference of 6 mobile phone manufacturers was squeezed. In the past, everyone would only choose some old models to clear the inventory, but this time it was "killed".
Huang Yiwen originally felt that the promotional price of her mobile phone was "already very extreme", but in the early morning of the first night of the big promotion, when she held her breath in front of the office computer and waited for her friends to play the promotional card, she saw that several xiaomi mobile phones dropped by 300 yuan and could be stacked with Jingdong plus 300 yuan deduction coupons, and only felt "really exaggerated".
After all, compared with the past, this year's Huang Yiwen has an extra layer of pressure: clearing.
There is a proverb in the mobile phone industry: there is no starvation, only death - not afraid of not selling enough goods, afraid of old inventory smashed in the hand. The situation this year is that last year's goods have not yet been digested, and new machines are ready to be launched in May this year.
No one expected a plunge in the first quarter of this year. Last year, the key word in the whole industry was: out of stock. Everyone is struggling for chips, and channel providers "make money when they have goods". There is optimism in the industry, with Realme selling 58.1 million phones last year, and a Realme employee told 36Kr that they plan to hit 80 million by the end of last year.
However, "gray rhinoceros" and "black swans" followed, local wars, global inflation, and outbreaks in first-tier cities. The market took a sharp turn for the worse.
In the first quarter of this year, according to IDC data, China's smart phone shipments fell by 14% year-on-year - specific to the situation of domestic mobile phone manufacturers, Xiaomi fell by nearly 20%, OPPO, vivo fell by more than 30%.
Globally, in the first quarter, shipments in Central and Eastern Europe fell by more than 15%, and Africa fell by nearly 30%. Several shipping regions have been frustrated, enough to break the manufacturers' concentration.
"The psychological impact has a relatively large negative impact on the desire to buy." At Xiaomi's first quarter earnings report this year, President Wang Xiang explained.
As a result, this year's 618 became the first hope of the mobile phone industry after it fell into panic and anxiety.
Conventions are being broken. In the past, when there was a big promotion, mobile phone manufacturers would try to level a bowl of water, and rarely used the consumption coupons of a certain platform alone. For example, after cat members did not have mobile phone subsidies on the same day, manufacturers did not participate in JD.com's membership promotions. But this unwritten rule is no longer binding.
At the end of the promotion, Xiaomi won the sales championship on various e-commerce platforms. But the backstage data that Huang Yiwen saw from Jingdong and Tmall, in addition to the glory of just 1 and a half years of independence, each mobile phone fell by double digits year-on-year sales, including Xiaomi.
"Everyone is using the money earned last year to make up for this year's holes." See who has the money in their hands to last a little longer. She said to 36Kr.
There is a more brutal side to the truth.
Strategy Analytics data shows that during the 618 period this year, Apple's mobile phone sales accounted for nearly half of the overall sales.
According to JD.com's June 19 mobile racing rankings, the top two are Apple's iPhone 13 (the lowest price is 4798 yuan) and Xiaomi's Redmi 9A (the highest price is 599 yuan) - the price difference between the two is as high as 8 times.
That is to say, even in this year's general decline environment, users are still willing to buy high-end machines - iPhone shipments in China rose by 17% in the first quarter - but are unwilling to pay for the national Android machine. After Huawei's mobile phone was stuck in the neck, other domestic mobile phones did not catch its market.
A mobile phone industry insider commented on 36Kr: China's high-end machine share has made a turn between Huawei and Apple, "Everyone has never eaten." ”
When the cold wind blew away the booming sales of China's low-end mobile phones, the truth was really cruel.
Live
But first, live first.
Shortly after the start of construction years later, Lin Hui found that something was wrong: the company was lowering its revenue forecast every week, and at the end of the first quarter, it had been reduced by 30% compared with the plan at the end of last year. Their high-end positioning of new products planned to ship more than 10 million, after listing, found that selling to 3 million began to struggle.
Lin Hui originally planned to change jobs, but inquired around and gave up the idea of leaving. "You can't see where the bottom is now." He said to 36Kr.
As a supply chain employee, Lin Hui can also clearly feel the hesitation of the product department. On the eve of the release of the new product, the most common state of the product owner of the mobile phone manufacturer is "bottomless heart". By this year, the anxiety of new products has risen by a few points.
They often overhaul their plans before the deadline. "It depends on whether you can win by surprise and win the other side." I'm going to go on this today, and I'm going to change it in two days. Lin Hui said.
Everyone keeps speculating about the opponent's mind, the foolproof approach is to stuff more flagship configurations into the low-end machine, 2K screen, Sony IMX766 sensor, 120w fast charge these flagship selling points, even so, Lin Hui often hears the reason for rework is "lack of competitiveness".
Everyone has to join the prisoner's dilemma and fantasize about defeating their opponents with a Taji horse racing move.
But the irreconcilable contradiction is that the price ceiling cannot be raised, and cost control makes it difficult for them to bend their limbs.
When companies meet, the most discussed topic changes from product expressiveness to cost control. In the past, only some models that took the cost-effective route would have a special need to reduce costs, and now almost every product owner will complain: "We have a lot of cost pressure." "I can't afford to accept this thing."
Lin Hui could only keep calling, threatening or pleading with suppliers to reduce prices.
Shipments across the industry are decaying at a rate of more than 100 million units, and everyone is bound to feel the cold.
Xu Zhiqing works for a head manufacturer. He remembers one time at 3 a.m., when he was just lying down, the phone rang. Xu Zhiqing was still half dreaming and half awake, and heard the leader say: "Come, let's have an online meeting, pull the table to calculate how much it costs." ”
Xu Zhiqing has gradually become accustomed to this rhythm, but it still takes a lot of effort to sit up from the bed.
He worked in the overseas region, and since the beginning of the year, the frequency of headquarters to branch investigation has changed from once a year to two or three times a quarter. He spent many early hours in the morning writing tables full of logistics, ASP (average selling price), labor costs, and the leader cut money down one cent.
The company used to be known for its generosity, Xu Zhiqing is difficult to imagine, and now everyone will be excited about the storage fee of 1 cent per mobile phone.
Xu Zhiqing has also recently tentatively downgraded channel profits until they cut to a tipping point they can afford. "When most people start to cry bitterly, they can't adjust anymore." He told 36 Kr.
The OV department has always been known for its generousness in offline channels - a first-line channel person told 36Kr that in some key cities, OPPO can give 70% rent subsidies to experience stores at most - but after the Spring Festival this year, some channels in first-tier cities, rent subsidies have been cut by 30%. (OPPO responded to 36Kr and did not see subsidy cuts.) ）
When a manufacturer employee reported the complaint of the channel to the leader, the leader told the truth: "Don't talk about the business (channel business), we may not live." When the brand side is not alive, can you still manage the retailer? ”
36Kr's contact with the industry will frequently say the same word: "cost reduction and efficiency". Of course, you don't hear CEOs mention those four words in public.
When an OPPO employee first joined the group this spring, there were only more than 200 people in it, and three months later, it had squeezed in nearly 500 people. A Xiaomi employee saw his department cut off 30% of its regular employees, but this was quite mild compared with the "group annihilation" of the local department where many friends were located.
Those who stayed were lucky and had to endure more pressure. A Xiaomi employee and a friend drinking, the other party was startled by his dark circles. He told his friend that as long as one day sales decline, the leader will @ the person in charge in the group, "do not sleep to write a report review."
Bloody expansion will finally come to an end in 2022.
The realme target, known for its wild run, has pulled back 10-20%. And the topic of internal discussion in Realme has shifted from sales to doing a good job. "Now hope is not to blindly pursue quantity, but to talk about stability." Before it was sacrificing gross profits and doing it without making money, now it can't be like this. The above-mentioned realme employee said to 36Kr.
Vivo internal research and development is divided into one year, three years and five years, the number of people more than three years is fixed, the number of people within one year is strictly controlled, and unless a clear direction of research and development is found in one to three years, and there are prospective projects that will be approved.
The overwhelming advertising of e-commerce sites disappeared, and everyone who spent money became "utilitarian".
In the past, Huang Yiwen would buy some exposure resources in Jingdong and Tmall, such as Tmall Interactive City. The price of this resource bit ranges from a few million to tens of millions, only the amount of exposure, which may enhance or consolidate the brand's impression, but there is no conversion rate. When the year is good, her company will set aside part of the fee to throw in.
Although the promotion fee that she can share with a single mobile phone this year is the same as last year, the budget will be mainly allocated to the old customers to retain rather than pull new, and the conversion efficiency is placed in the first place, and this part of the resources is naturally excluded from the list.
People in the industry occasionally reminisce about 2017. That year, Vivo exclusively named Tmall Double Eleven Night, OPPO spent 500 million yuan to win the exclusive naming rights of the new season of "China New Song", Xiaomi spent 1.9 billion yuan for advertising and publicity, users lined up overnight to buy Huawei Mate, the store was full of joy and bright lights.
In just five years, it was like a lifetime away.
Overseas clouds
Not everywhere is news of depression.
Although China's mobile phone market is declining, according to a closed-door report by GFK, the market in India, South Asia, the Middle East Africa and Latin America will grow slightly this year.
Everyone is flocking overseas. Yan Baiyu, an overseas emerging market worker of a head mobile phone brand, told 36Kr that the number of manufacturers bidding locally this year has doubled. The influx of new manufacturers directly led to local employees sitting on the ground at the starting price, and later manufacturers could not recruit people with banknotes, "which has long been divided up." Yan Baiyu mentioned that many mobile phone promoters last worked selling clothes in the mall.
If you look at the price segment, in the first quarter of 2022, global smartphone shipments of more than $800 also increased by 3%. (gfk data, excluding North American market)
Unfortunately, Chinese manufacturers have not received any benefits from it.
In April 2022, 2,000 consumers in Western Europe were asked," which brand would they buy when changing phones?" They gave this answer: one-third buys Apple, one-third buys Samsung, and one-tenth buys Xiaomi. Only 1% of people will buy OPPO, and vivo buyers are 0%.
Although Chinese mobile phone manufacturers rank among the best in major overseas market shipments, they have taken the low-cost machine route in the past.
In 2020, OPPO sales in Spain soared more than ten times. An industry insider remembers that the sales secret circulating is: as long as it is cheaper than xiaomi. Xiaomi's global average selling price in 2022 is $226, while Samsung is more than $380.
Chinese companies have not yet waited for the time to accumulate brand power and move towards high-end machines - an industry insider told 36Kr that in Western Europe, OPPO, although the main force of shipments is still the cheap A series, but in two years to throw in 3 billion yuan for marketing, ready to survive to the high-end market blossom - the harsh reality of 2022 gave them a heavy blow.
Corresponding to the rise of high-end machines, it is the decline of low-end machines.
Because global inflation is hitting the lives of low- and middle-income people. Kenya is one of the three largest mobile phone consumer markets in Africa, and after the Russo-Ukrainian War, the price of the local staple chapati has doubled. In Latin America, bread prices in Mexico rose 22 percent. India's food inflation data hit an eight-year high. Inflation continued in Europe, so much so that the ECB raised interest rates for the first time in 11 years.
People who have been drained of their wallets by daily basic living consumption will certainly not be in a hurry to change their mobile phones this year.
The low-end mobile phone market is the first to suffer. According to the Canalys report, global shipments of mobile phones under $200 fell by 34 million units in the first quarter.
Domestic manufacturers have to find ways to hold the cornerstone of their overseas markets. And the market below $200 has no fancy way to protect it, nothing more than small profits and high sales.
This year's overseas market structure is particularly unfriendly to Chinese mobile phone manufacturers.
In the overseas operator channels with the largest shipment, the price reduction is cruel. An order, Yan Baiyu has not yet participated in the second round of quotations, he heard the bad news from overseas operators that he was going to lose orders this year. The psychological price of overseas operators has been pulled lower by Yan Baiyu and their opponents, and they immediately lose interest in talking with him again. Yan Baiyu asked about the price of his opponent, and the other party's answer made him dead hearted, "There is no chance, even if you lose money, you can't reduce it like that." ”
Generally, the transportation of products sold overseas is also subject to additional costs such as customs clearance, international logistics and customs entry fees. In the past two years, the price of sea freight has soared, but the final offer of the opponent to overseas operators is the customs price of Yan Baiyu's products from Hong Kong. It was clearly a suicidal offer, with the only contest being who could bleed to the end without dying on the field.
In India, for example, the most popular thousand yuan machine, usually the channel profit is only 50 yuan, and some manufacturers have cut 5-10% this year. "OPPO (excluding one plus), vivo do not make money, realme, millet earn a little." An employee in India said.
Yan Baiyu was not reconciled, and asked the boss if we could also make a plan and reduce the price? The boss told him that there was no way, last year's deficit had not been made up, "this year I still want to make a little profit and make some money." ”
In fact, Yan Baiyu, even as the head of the whole machine manufacturer, it is too difficult to "want to make a little profit" this year. In the event of a major industry downturn, a little short board in the supply chain may lead to a total loss.
For a long time, the position of domestic manufacturers in the global mobile phone supply chain has been unstable. When they need to digest production capacity, they still have a certain right to speak, and once the supply is tight, they are often at a disadvantage, which is difficult to compare with Apple and Samsung.
Samsung controls the most critical components such as screen and memory, not only will it not be out of stock, but also control the cost. In yan Baiyu's words, it is "Thanos". To fight the price war, in his area, even the famous millet with good price performance can not do Samsung. "I was forced to lose my pants." He told 36 Kr.
This year's Samsung is even more ruthless. According to South Korean media The Elec, they are holding 50 million units in inventory, the vast majority of which are low-end product lines. Under the pressure of selling inventory, the price reduction is even more extreme. In the first quarter of this year, in the Asia-Pacific region, Samsung's low-end machines below $300 also showed a small increase, and 5G has been made standard. "The cost of fighting can not be fought, Samsung pressed to the end, directly starved each other." Yan Baiyu said.
In the global high-end mobile phone market, Chinese companies are even more suppressed by Samsung.
One of the reasons is that in the supply chain of key components, Samsung is unassailable. For example, Samsung is the only manufacturer in the world to sell tens of millions of folding screens, accounting for more than 80% of this category.
An industry insider told 36Kr that Samsung folding screen is still the world's first because of its self-developed technology. They will supply the best technology to their Samsung brand mobile phones first, and other manufacturers can only wait for the production capacity to increase. For example, the folding screen Galaxy Z Fold3 released by Samsung in August 2021 uses the "de-polarizer" technology, and the rest of the manufacturers can use it as soon as the end of this year, which is more than a generation later than the Fold 3.
The lack of long-term technology research and development has never been so prominent in the constraints of domestic mobile phone brands and supply chains.
Of course, for front-line employees like Yan Baiyu, he can only sleep alone in anxiety until the early morning, privately because the company can not reduce the cost of the supply chain. The more common emotion is powerlessness when writing a summary, "My mom, just despair." ”
Strive against the stream
On the evening of July 4, when the price of xiaomi 12S series starting from 3999 yuan appeared on the screen, Lei Jun said: "Our pricing may disappoint everyone."
Lei Jun shouted the slogan of "impacting the high-end" in the Xiaomi 10 era, which has long become the mantra of domestic manufacturers. At least in the domestic market, their desire to climb the high-end has not cooled.
At an internal meeting in the spring, Lei Jun said with a grim face: "I have four things in my hands now, automobiles, chips, information construction, and stock prices." ”
He told the staff present that the Ukrainian business stagnated, and although the supply chain was slowly recovering, the demand was gone. As for the solution, it is nothing more than "tightening the belt of the pants".
After that, Lei Jun's words turned, "We must also increase investment in research and development." ”
If you look at the first quarter financial report, Xiaomi is now spending money unlike "tightening the belt of the pants", research and development expenses have risen by 16%, and sales and administrative expenses have also risen by double digits. Even if there is a partial attrition, the overall number of employees in Xiaomi has increased by 10,000 year-on-year, and welfare expenses have not shrunk significantly. The Sony sensor development of the 12S Ultra mentioned in Lei Jun's Weibo also cost $7.5 million.
"The necessary investment to do, to turn over, we must solve the shortcomings." Lei Jun said at the meeting that the "short board" in his mouth is nothing more than a pain heel shared by all Chinese companies - technology research and development. "At this time, everyone does not invest, we invest in research and development, that is, to play offside stations." Lei Jun explained this to his subordinates at the meeting.
After the meeting, a Xiaomi employee heard his leader sigh: This year's situation, chip investment is still such a large proportion, Lei always has courage.
It is boldness and forced by the situation, because Chinese mobile phone companies are watching the era of relaxation come to an end little by little.
"China's mobile phone market has completely entered the stock market, and if there is no good product innovation to attract them, the replacement cycle will only become longer and longer." Hu Baishan, executive vice president and chief operating officer of Vivo, said in an interview with 36Kr and other groups that he had the impression that the early replacement cycle of smart phones was 16-18 months, and 2022 has reached 36 months.
Moreover, the shocking market data of the 618 group shows another side of the domestic market.
In the entire 618 promotion, on Tmall alone, Apple sold 1.9329 million iPhones, 20% more than all Android manufacturers combined.
The way to break the game has always been there, but it is too difficult to walk.
After the "hit the high end" campaign of smashing money and smashing people, according to Counterpoint data, the market share of Android mobile phones with a price of more than $600 (about 3800 yuan) in China will shrink by 8% in 2021.
Glory gave a dead order to the sales end, and this year's proportion of high-end machines in the overall sales should be raised from 7% to 10%. Promoters in some provinces sell a flagship of more than 4,000 yuan for a commission of 100-150 yuan, and the bonus is deducted if it is not up to standard. Even so, according to an industry insider's calculation of 36Kr, in an economically developed province, even if Glory reaches 10% of the market sales, the total number of high-end machines is only 4% of Apple. In an interview, Zhao Ming gave the data that Glory accounted for more than 7% of the market of more than 4,000 yuan, and Apple exceeded 60%.
In the past, domestic manufacturers could stay in their comfort zone and make a lot of money. But in a global, market-oriented industry, that comfort zone will sooner or later disappear.
Now, they have to spend money and time to accompany the domestic supply chain to invest in research and development in a situation where the pay and get are not proportional, and improve the yield rate.
The uncertainty along the road may be more than expected. After two generations of product brilliance, the first month sales of the Xiaomi 12 series fell below half of the Xiaomi Mi 11 series. The reason is related to the poor experience of Xiaomi Mi 11. Snapdragon 8 two-generation chips are called "fire dragons" by users because of high power consumption, but Xiaomi can't come up with too good solutions, large-scale Wi-Fi hotspot failures, but also scolded by users for a season.
In the foreseeable next three or five years, Apple will still be the benchmark that cannot be bypassed. So the head manufacturers try to find another way to seize the high ground that Apple has not occupied for the time being, such as the folding screen market - even if it is still full of too much uncertainty.
The way to open the way is still the cost performance that manufacturers are familiar with. When OPPO folding screen Find N was launched, it saw the pricing of 7699 yuan, not only peers, but even OPPO internal surprised, they estimated how the pricing should be more than 10,000 yuan.
"Profits won't be great. If you want to make money, you still have to sell more than 10,000. A supply chain person gave 36 Kr calculations: in the market, the folding screen plus hinge is 2800 yuan, plus other structural parts and batteries, processing costs, the total cost of hardware should be around 5000. Usually the cost of mobile phone hardware is 50-60% of the price. According to his estimates, 500,000 units of sales can guarantee the capital, and more than 1 million units can make money.
According to JD.com data, OPPO Find N sold 53,500 units in the first quarter, and OPPO did not announce offline sales. An industry insider told 36Kr, "The cheapest amount of OPPO is very small (relative to straight phones). The high-end version has added some orders, but overall it is still not very profitable. ”
In any case, OPPO still relies on the price to open the sound volume in the folding screen market.
When find N launched, Vivo's folding screen NEX Fold was stranded. Originally, this phone was scheduled to be released at the same time as the Find N. One of the employees involved in the project remembers that he received one notification email after another marked as "level 1 risk" later in the project, and colleagues from the R&D department told them that the release time had gone on again because it was not up to standard.
Behind the twists and turns of OPPO and vivo folding screen products, it reflects the difficulties of all domestic manufacturers to impact the high-end: the difficulty of technology research and development, and the helplessness in the face of key parts supply chain.
A chip industry source told 36Kr that since last year's Snapdragon Gen 1, Xiaomi began to gradually reduce the purchase of Qualcomm's customized services. This year, some of Xiaomi's modules are more debugged by the internal team, using only Qualcomm's basic after-sales. The Leica projects that Xiaomi has spent a lot of effort to win are also debugged by themselves and Leica. "Follow Qualcomm to do it, and the next year Qualcomm can give the things they make together to other manufacturers."
(Xiaomi responds to this 36Kr: mobile phones equipped with Qualcomm chips, Xiaomi will make joint adjustments with Qualcomm; The adjustment of the Xiaomi Mi 12S series in terms of imagery was jointly completed by Xiaomi and Leica. ）
Xiaomi's peers also have the same idea: as far as possible to firmly grasp the original research technology in their own hands.
Another employee in charge of chip debugging in the head mobile phone factory told 36Kr that he did not feel the danger of layoffs, but saw that two-thirds of the entire team's manpower was invested in the high-end machine project team. "We have some ideas and pursuits, and we all want to do high-end."
The money on the blade still has to be spent
In order to cut costs, Xu Zhiqing's area cut more than 200 shopping guides in one go last year, but because the local offline market was extremely dependent on offline sales, sales fell sharply at the beginning of this year, and he had to make up more than 100 shopping guides and raise the salaries of local employees.
Even in bad times, the money to spend is still to be spent.
In the integrated store, OPPO has increased investment.
Since the second half of last year, OPPO has begun to promote the boutique experience area. The channel boss only uses the basic decoration fee, the rest of the cost is covered by the manufacturer, design, decoration one-stop service, some 4, 50 square meters of experience area cost up to 3, 400,000. The display area where the manufacturer next door uses several counters to barely stitch together, and the budget is only one-tenth of the OV.
When a city manager from another manufacturer saw these stores appear, he had only one thought in his mind: madness. "It's asset-heavy binding. Now the bosses can't withdraw, and they have to pay compensation for it. ”
Even if OV headquarters is "reducing costs and improving efficiency", after the new machine is listed, it is also very willing to let the agent earn enough profits. For example, oppo Reno 7 in the first quarter of this year during the peak sales period, in addition to the profit increase point of each mobile phone, there is an additional reward of 100 yuan for selling one. The city manager commented: "This is called money is used on the blade. ”
When I heard that Xiaomi was going to issue rent subsidies this year, the channel merchant Xu Junjie was really surprised: after cooperating with Xiaomi for so many years, such a big hand is still the first time. In second-tier cities, a xiaomi experience store of more than 100 square meters in the core business district will have a monthly rent of more than 30,000 yuan. Usually, large channel providers will operate dozens of stores, and the rent will reach millions in a month.
Xu Junjie tentatively sent WeChat to ask the regional leader: Is this true? The other party returned a smiling expression.
Xu Junjieti relaxed in his heart, turned out a small calculator to calculate the account: these days, how much subsidies can be obtained, how much less money to lose.
Since March this year, Xiaomi has successively issued subsidies totaling 120 million yuan to offline stores. This subsidy is unusual: stores that cannot operate normally due to the epidemic will bear a certain proportion of rent during the closure period, and some areas will reach 50%.
"Xiaomi has finally done a good thing for us." Xu Junjie told 36Kr.
For Xiaomi, it is not easy to come up with this subsidy at this time. Xiaomi's quarterly profit has been slashed, and according to GFK data, sales in India, Xiaomi's largest overseas granary, have fallen by more than 20%.
However, Xiaomi's offline channels have the shallowest foundation among several large factories, without the old part of the OV system's backgammon era, and the glory ratio, and the lack of Huawei's blood and aura. Therefore, Xiaomi took out this money to subsidize the channel, which can be regarded as a move against the trend of expansion.
“Never let a good crisis go to waste.” This phrase, which has been repeatedly mentioned in 2022, has a different taste at this moment.
When China's mobile phone industry, which we think is already quite powerful after a decade of rapid expansion, is forced to cross the harsh winter in 2022, practitioners are painful, uncomfortable, but also get the opportunity to examine themselves with the coldest eyes.
(At the request of the interviewee, use a pseudonym in the text)
Cover source | Visual China