25 May 2019

Handset makers not losing sleep over China Mobile-Apple tie-up

Although China Mobile (00941.HK) has finally inked a long-waited deal with Apple to sell the latter’s iPhones, mainland handset makers are not really worrying much about their business prospects going forward.

Leading domestic 3G handset brands like Lenovo, Huawei and Coolpad have done well in recent years. The absence of a tie-up between China Mobile and Apple until now had in part helped the Chinese firms establish themselves in the market and attract a bunch of loyal customers.

Reflecting the increased competition, sales of Apple handheld devices in Greater China tumbled 14 percent in the third quarter this year compared to the same period in 2012. The US giant’s market share in the mainland has fallen to 5 percent, putting it in the seventh spot. South Korea’s Samsung remained in the top position with a market share of 18 percent.

Meanwhile, local brands — led by Lenovo, Huawei and Coolpad — surpassed Apple in terms of market share, according to research institute Canalys. Brands like Xiaomi and Meizu has also gained ground among young consumers.

Given their entrenched positions, domestic firms are confident that the latest deal between China Mobile and Apple won’t cause a serious dent to the home-grown brands.

Su Jin, the vice president of Coolpad, a brand under China Wireless Technology (02369.HK), has told the China Securities Journal that the Apple deal won’t have any material impact on Coolpad’s handset business. He noted that Apple products were being used even earlier on China Mobile’s network. While Apple products were not officially bundled with China Mobile, which has the largest number of subscribers in the country, many of the carrier’s users had been buying iPhones from other channels during the 3G era and surfing the internet through Wi-Fi or 2G network, Su pointed out.

Coolpad has already gained a foothold in the lower-end of the 4G smartphone market. “We will upgrade all of the Coolpad smartphones that are selling at over 1,000 yuan (US$165) to 4G in the first half of 2014, and the threshold will be lowered to 700 yuan in the second half,” the Securities Journal quoted Su as saying.

Analysts point out that in the 3G era there was quite a large gap between local and foreign smartphone brands in terms of technology, but the gap is narrowing now. As local firms step up efforts to upgrade their hardware and software, they will be competing more or less on the same ground in the upcoming 4G era.

– Contact the writer at [email protected]


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