Samsung has been losing out in the China smartphone market in recent years, with the slide getting more pronounced after the 2016 Galaxy Note 7 debacle. As many Chinese shifted to domestic brands such as Huawei, Xiaomi, Vivo and Oppo, Samsung has seen its market share in the country fall to low single digits.
Reduced to a bit player in the world’s biggest smartphone market, after once being the top brand there, the Korean electronics giant is seeking to recover some of the lost ground. Looking for ways to shore up the business, Samsung is now pinning hopes on 5G.
As China prepares to roll out commercial 5G service, Samsung has launched a marketing campaign in a bid to lure mainland consumers into the Korean brand’s ecosystem.
Last month, Samsung China unveiled a “5G Pioneer” program that will allow Samsung smartphone buyers to upgrade to 5G devices from the firm once the next-generation mobile service is launched in China.
Partnering with the nation’s three state-owned mobile operators, Samsung announced that consumers who purchase Galaxy S10 series or Galaxy A80 mobile phone at any Samsung official authorized channel can join the Samsung 5G Club by paying a 99 yuan fee.
After the joining the club, users will be able to upgrade to Samsung’s 5G smartphone for free when 5G is launched in the second half of 2019.
Samsung 5G Club members can also get coupons to purchase Samsung’s IoT products, Baidu network disk as well as iQiyi video streaming service VIP membership. In addition, Samsung will invite 50 members to visit South Korea to experience live 5G.
The promotional campaign makes it clear that Samsung is aiming to win back some market share in China ahead of 5G launch. The task, however, won’t be easy as many Chinese still remember the 2016 disaster when Samsung issued a global recall of Galaxy Note 7 devices due to battery issues.
At the time, several people in China complained that Samsung had discriminated against Chinese consumers in its handling of the product recall. While consumers in the US were given a video apology and offered various replacement options and compensation, Chinese buyers were told that most phones in the market don’t need to be replaced.
Following a backlash and stinging criticism from Chinese state media, Samsung issued an apology, saying it failed to provide proper explanation on what it claimed were safe Note 7 phones in China.
But the apology didn’t soothe the anger of Chinese customers, and they started shunning the Korean brand in greater numbers. That led to Samsung falling significantly behind against other brands in the Chinese market, resulting in its dismal position today.
Even the firm’s recent Galaxy S10 series, which was received well in most markets in the world, failed to gain traction in China.
As many Chinese customers are now opting for domestic brands also out of a sense of nationalism and patriotic feelings amid a US trade war, Samsung faces a tough battle to win back Chinese users, despite the firm’s free 5G upgrade offer.
China’s smartphone market has undergone a rapid change in the past few years, with local brands, led by Huawei, beating back foreign players such as Samsung and Apple.
As of now, Samsung holds less than one percent of market in China, down from almost 20 percent share in 2013, according to market research firms.
In the recent mid-year online shopping festival last month, Samsung was absent from the best-selling top 20 smartphone models. Apple’s iPhone XR was the bestseller during the festival, while others brands were mostly Chinese smartphone offerings, media reports have noted.
Samsung seems to have virtually disappeared in China, a situation it needs to redress. As it faces direct competition with Huawei, Samsung has no choice but to grow the China market.
Huawei was one of the first to unveil a 5G smartphone in the market, together with Samsung and a range of local Chinese brands. To capture a slice of the unfolding 5G era, Samsung’s strategy is this: build competitive advantage by locking up users before the launch of 5G service in the market.
According to market research firm Canalys, 5G will overtake 4G in 2023. By then, manufacturers across the globe would have shipped around 1.9 billion 5G-enabled devices.
By 2023, 5G devices are expected to account for about 51.4 percent of all smartphone shipments. The Greater China region is seen consuming 34 percent of the shipments by then, followed by North America with 18.8 percent and Asia Pacific with 17.4 percent.
Canalys believes the Chinese government’s efforts to accelerate 5G growth will help the market. In China, 5G devices could account for 17.5 percent of total smartphone shipments as early as 2020.
Given such prospects, is it any wonder that Samsung doesn’t want to be left out of the game?
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