Chinese smartphone companies boost their products and seize grass in the domestic Apple market

SHANGHAI (Reuters) – China's smart phone retailers say it's a tough sell, consumers are reluctant to oppose it, put off by the economic cold.

Although Huawei-led national brands have made great strides, they are attracting consumers with first-rate hardware and innovative features as they move up the price range from $ 500 to $ 800. The result: a share loss in a key segment for Apple Inc. and new price drops for iPhones at Chinese retailers.

"Many of the people who upgrade are moving from Apple brands to Chinese brands but very few Chinese brands to Apple," said Jiang Ning, who runs a Xiaomi store in the northern province of Shandong.

Huawei Technologies Co Ltd, Xiaomi Corp, Oppo and Vivo have already tried to take over the largest smartphone market in the world with value-for-money terminals, but consumer demand for better phones has prompted to rethink their strategies.

"People are more attached than ever to their phone and have greater expectations for the function and experience that it offers. The answer has been a constant upgrade of hardware specifications, "Alen Wu, global vice president at Oppo, told Reuters.

He Fan, CEO of Huishoubao, who buys and resells used phones, said he noticed a change in Apple's consumption for Huawei, motivated by Chinese love for selfies and the emphasis placed on the quality of the camera. Huawei has links with the German manufacturer of Leica cameras since 2016.

"Huawei's cameras have become significantly better than Apple's in that they more closely match the tastes of Chinese consumers," he said.

Compared to dual cameras common to most smartphones, the Huawei P20 Pro has three rear-facing cameras, plus improved zoom capabilities.

This is one of many new devices in the P20 and Mate 20 ranges, allowing Huawei to grow from 8.8 percent to 26.6 percent of Huawei's share in the $ 500 to $ 800 segment. in China, revealed the research firm Counterpoint.

Apple, by contrast, saw its share of the segment fall from 81.2% to 54.6%, also penalized by its decision to go upmarket even higher with the X series of the iPhone.

"Most Chinese smartphone buyers are not willing to shell out more than $ 1,000 for a phone," said Neil Shah, director of research at Counterpoint. "This left a gap in the segment below $ 800, which Chinese sellers have caught up with both hands."

(For a chart on "Chinese smartphones increase market share in the national market", click on tmsnrt.rs/2HvsyQi)

Phone shipments of more than $ 600 in China rose 10 percent in 2018, according to data from the Cbadys firm. On the other hand, the global market fell by 14%, marking a second year of contraction.

FOREIGN GAINS

Apple's weaker seal in China was highlighted this month when several large retailers simultaneously cut iPhone prices for the second time this year.

A 64GB iPhone 8 sold at Suning.com Co Ltd now costs 3,899 yuan ($ 580), about 25% less than in December. It's also cheaper than its $ 599 price in the United States, where iPhones are generally cheaper to buy than in China. Most iPhone models up to the iPhone 8 series saw their prices drop in China, but not evenly.

In terms of income too, this seems to be a story of divergent fortunes. In October and December, Apple's revenues in Greater China declined by about a quarter from the previous year. Greater China currently accounts for 15.6% of its overall turnover.

Huawei, the world's second-largest maker of smartphones, said its revenue for 2018 would have increased 21 percent, which badysts attributed largely to the strength of smartphone sales.

More broadly, fewer sales for Apple means fewer customers for its App Store and streaming media services. The shift from Chinese brands to high-end phones has also led to a greater breakthrough in foreign markets.

Huawei's shipments to Europe increased 55% in the last quarter and now account for 23.6% of the market, according to Cbadys. This is not far behind Samsung Electronics and Apple, which saw a slight drop in shipments.

OPPO, VIVO

If Huawei takes the lion's share of the grbad that Apple once had in China, Oppo and Vivo – brands belonging to the conglomerate of electronic equipment BBK – constitute the new threat.

In June, Vivo launched the Nex which starts at 3,898 yuan ($ 610) and in July, Oppo launched the Find X, priced at 4,999 yuan ($ 755).

These models mark the first time that brands set a phone above $ 600, a net change from their roots, selling models ranging from $ 300 to $ 500 to younger consumers in second-tier cities.

The devices came with features not available on the iPhone, including under-the-glbad fingerprint sensors and "no-notch" screens, both of which increase the usable screen size .

Xiaomi also goes upmarket and announces in January that it would split its line of low-budget Redmi phones into a sub-brand. In doing so, he is inspired by the book of Huawei, which sells for years cheaper devices under the Honor brand, thus helping to differentiate its products.

Redmi will target international markets and online sales, while the flagship brand Xiaomi will target China and the offline retail markets, the company's founder, Lei Jun, told reporters.

Last month, Xiaomi unveiled the Mi 9, its latest flagship device at a price of 2999 yuan ($ 450). But the company also said that it could be the last time that a flagship phone Xiaomi would be sold less than 3,000 yuan.

"The phones of the flagship Xiaomi series were once still set at 1,999 yuan," Lei said. "It's a factor that has contributed to our rise, but it's also become an obstacle to our growth," he said.

(For a graph on "Chinese smartphones increase its share of the domestic market", click on tmsnrt.rs/2Hx2KD4)