China is the largest smartphone market in the world, as many of you know. Many well-known smartphone manufacturing companies are located in China, like Xiaomi, Huawei, ZTE, OnePlus and Meizu, for example. The Chinese smartphone market has been growing immensely for years, it has basically been doubling in size year after year, up until a few years ago, when the growth started to slow down. The Chinese smartphone market is quite saturated at this point, and analysts have been predicting that this will happen for quite some time now. A ton of new companies have opened up their doors in China in the last couple of years after they’ve seen how successful Xiaomi turned out to be in such a short period of time.
Let me put things into perspective, there are approximately 300 smartphone manufacturers currently active in China, so no wonder the market is quite saturated. Analysts actually predict that half of those companies will shut their door in 12 months time due to competition. “The mobile-phone industry changed more quickly and brutally than expected. As a startup, we couldn’t find more strategies and methods to break through,” said Dakele Chief Executive Officer, Ding Xiuhong. In case you haven’t heard of Dakele, that is a former China-based Chinese smartphone manufacturer which was quite successful for a while, they were well-known for manufacturing high-quality iPhone clones back when the Chinese smartphone market was doubling in size annually, but the company had to shut down last month due to competition, so Mr. Xiuhong definitely has some experience in this regard.
Shipments of smartphones in China more than doubled 2010 and 2011 according to Canalys, and such incredible growth basically stopped there. The vast majority of smartphone manufacturers in China feel the saturation consequences at this point, and are looking to sell their devices elsewhere, at least the largest companies like Xiaomi and Huawei. Those two smartphone OEMs have been pushing their products intensively to India for quite some time now considering India is the second largest smartphone market in the world, and it’s far from being saturated. India is basically where China was a couple of years ago, there’s plenty more room for progress. Chinese smartphone OEMs are also aiming for other developing markets, like Africa for example, smartphone sales have been growing on that continent as well.
Unfortunately, such situation in the Chinese smartphone market will be the end of a number of smaller companies, as already mentioned. It will be interesting to see what happens in China in a year or two, but the situation sure is interesting. Last year’s growth was the slowest since 1990, smartphone sales grew by 2%, which is the lowest ever rate recorded by Canalys. For comparison’s sake, the growth rate was 150% in 2011. “It’s becoming a tough market even for tier-one players like Huawei or Xiaomi because it’s hitting saturation. In order to face that market saturation, they’re expanding into the lower tiers that were owned by the smaller brands,” said CK Lu, a Taiwan-based analyst at Gartner Inc. In addition to all this, it is worth mentioning that the companies who do manage to survive in China will have to look for a way to export their smartphones, or even manufacture them abroad.