China's smartphone market continues to be sluggish, why is this growing against the trend? Have you changed your phone?

According to the latest data released by the China Academy of Information and Communications Technology, in the first half of this year, the total shipment of mobile phones in the domestic market reached 130 million, down 4.8% year-on-year. Among them, the cumulative shipment of domestic brand mobile phones reached 105 million units, down 8.8% year-on-year, accounting for 81.1% of mobile phone shipments in the same period.

Overall, shipments of domestic mobile phone brands in the first half of the year still showed a downward trend, but shipments of high-end models represented by folding screen mobile phones achieved a contrarian growth. Experts believe that the full recovery of the domestic mobile phone market still takes time, in the second half of the year, the high-end model market competition will be more intense, folding screen will become the focus of the competition.

01

The high-end market has repeatedly reached new highs

"From the trend of the domestic mobile phone market, after experiencing the peak of 2016 and 2017, the growth rate of the mobile phone market has gradually begun to decline. Affected by economic and environmental factors, it has continued to operate at a low level recently, the market as a whole is shrinking, and the product upgrading and strategic layout of mobile phone manufacturers are basically based on maintaining stability. Wei Yuhuai, executive president of Zhongcheng Think Tank, said.

Zhang Tiantian, director of the Digital New Infrastructure Research Office of the Electronic Information Research Institute of the CCID Research Institute, believes that at present, the overall innovation of the smartphone industry is relatively insufficient, but in terms of screen, storage, camera, super fast charging, games and other subdivided features, bright spots are also emerging.

The latest data from the International Data Corporation (IDC) shows that although the overall Chinese smartphone market continues to be sluggish, the high-end market priced above $600 is less affected. In the second quarter of this year, the market share of high-end mobile phones priced above $600 in China reached 23.1%, an increase of 3.1 percentage points compared with the same period in 2022.

Market research agency Counterpoint recently released a report showing that vivo ranked first in the Chinese smartphone market with a market share of 17.7% in the second quarter. Analyzing the reasons behind its success, the high-end breakthrough strategy has obvious results. Over the years, vivo has continued to lay out the four long tracks of design, imaging, performance and system, laying a strong technical foundation for it to impact the high-end mobile phone market.

Imaging is still an important competitive track for high-end mobile phones in 2023. "Algorithms are the top priority in imagery. OPPO has integrated a team of more than 400 imaging algorithm talents, including the Imaging Technology Center, OPPO Research Institute and external partners, to work together for OPPO's imaging algorithms, with more than 400 million yuan invested in algorithm reconstruction and R&D alone. Liu Zuohu, OPPO's chief product officer, said.

"High-end is the only way for Xiaomi, and it is a battle of life and death!" Lei Jun, founder, chairman and CEO of Xiaomi Group, said. The financial report shows that in the fiercely competitive industry environment, Xiaomi's high-end smartphone breakthrough has achieved remarkable results, and profitability has been further released. In April this year, Xiaomi 13 and Xiaomi 13 Pro were successfully released in overseas markets, and Xiaomi's high-end mobile phones further expanded into overseas markets.

"China's high-end smartphone market has grown to be the most active and diversified market in the world." Wei Yuhuai said that mainstream mobile phone brands have adapted to the times and began to adopt the dual flagship strategy of "straight screen flagship + folding screen flagship", with a diversified flagship product portfolio, and strive to become a leader in imaging, new form technology innovation and application innovation, so as to seize the growth opportunities of the future market.

02

The folding screen market performed well

Although the overall smart phone market is sluggish, folding screen mobile phones have become a category with continuous growth in shipments in recent years, and the growth rate is stable. Wei Yuhuai introduced that from the perspective of the overall smartphone market, the market with a price of more than 4,000 yuan and more than 6,000 yuan in recent years is in the growth ranks, partly due to the contribution of folding screen mobile phones. At present, folding screen mobile phones account for 6% of the mobile phone market priced more than 4,000 yuan, and 12% of the mobile phone market priced greater than 6,000 yuan, which is closely related to the efforts made by manufacturers in folding screen mobile phones.

Counterpoint data shows that China's folding screen product shipments reached 1.02 million units in the first quarter, a year-on-year increase of 52.8%, becoming one of the few bright spots in the smartphone market.

Major smartphone companies in the mainland have launched corresponding layouts, and various brands of folding screen mobile phones have entered a rapid iteration stage, and domestic brands have occupied a place in the high-end market with folding screen mobile phones.

Counterpoint data shows that in the first quarter, thanks to the strong market performance of OPPO Find N2 and N2 Flip, OPPO folding screen sales increased by more than 300% year-on-year, and became the first place in China's folding screen market with a share of 28.4%. It is expected that the cumulative sales of the Find N2 series will exceed 500,000 units in the first half of the year.

On the evening of August 14, Xiaomi released a new generation of folding screen mobile phone Xiaomi MIX Fold 3. "Close it, the experience is comparable to the iPhone 14 Pro Max; Open the folding screen to make the best. Lei Jun said that between the thin and light folding and the all-round flagship, the Xiaomi MIX Fold 3 has no shortcomings and no trade-offs, achieving both.

The relevant person in charge of vivo introduced that first of all, we must ensure that there is a comprehensive experience as good as the straight mobile phone, and then talk about the innovative value of the folding form, which is the biggest difference between the vivo folding flagship mobile phone. After the release of vivo X Flip, vivo's small folding lack in the folding screen market was also filled.

Zhang Tiantian believes that the folding screen mobile phone market has performed brilliantly because of innovation. In the context of the current serious homogenization of smart phones, compared with traditional smart phones, the appearance and form of folding screen mobile phones have been significantly differentiated, in addition to meeting the differentiated appearance needs of consumers, their form changes can better meet the actual needs of consumers in office, entertainment and other scenarios.

The second is the development of the technology industry. For example, the continuous weight reduction and thinning of the fuselage, the optimization of the screen crease problem, the advancement of hinge technology, the adaptation and optimization of mobile phone software content and folding screen, etc., have greatly enhanced the practicality of folding screen mobile phones, thereby improving the consumer experience. In addition, the major folding screen mobile phone products continue to innovate technology and iterative updates, forming positive feedback and promoting each other with the outstanding market performance.

03

Innovation is still to be developed

"In the second half of this year, the competition of major brands in the field of low, medium and high-end models will continue to intensify, the low-end model market will mainly exchange profits for space, and the high-end model market will seize the highlights and explosive opportunities of folding screen innovation." Zhang Tiantian said.

For major mobile phone manufacturers, innovation still needs to move forward to the deep water of technology. On the evening of August 14, Lei Jun announced the strategic upgrade of Xiaomi's technology, in which four key paths and principles, namely deep cultivation of underlying technology, long-term continuous investment, deep integration of software and hardware, and comprehensive AI empowerment, further clarified the core direction of Xiaomi's adherence to the iron law of "technology-oriented" and firm investment in the future.

Hu Baishan, executive vice president and chief operating officer of vivo, said that it is necessary to differentiate in the scenarios that users need most, pay attention to the accumulation of long-track capabilities, continuously improve the length of longboards, and establish the world's first ability after differentiation.

"The essence of the high-quality development of the mobile phone industry is to change users' cognition of past mobile phones, provide new scenarios, and meet new experiences." In the future, OPPO will increase investment in science and technology, continue to work in the two tracks of 'folding + image', and adhere to the high-quality development of the mobile phone industry from product, marketing to channels. Liu Bo, president of OPPO China, said.

"We must seize the window period of 5G technology and enhance our core competitiveness." Wei Yuhuai believes that 5G technology is an important driving force for the future smartphone industry. 5G technology puts forward new requirements and challenges for the design, manufacturing, sales and service of smart phones, and also provides new opportunities and space for the innovation and upgrading of smart phones.

Zhang Tiantian believes that technology and application innovation should be carried out on both sides, and on the basis of further improving the current problems such as power consumption and screen faced by mobile phones, it is also necessary to strengthen innovation on the application side. For example, the current monthly 5G mobile phone shipments have basically remained at about 80%, and the "killer" 5G mobile phone applications for consumers urgently need to be innovated to meet consumer demand.

Source: Economic Daily

Process Editor: TF022