Yesterday we saw a report emerge that confirms Xiaomi’s ascent to the summit of China’s smartphone market for Q2 2014, with a market share of 14% in the second quarter of the year. The report from Canalys goes on to reveal quite a bit about the Chinese smartphone market and its position globally, painting a vivid picture of key players, shakers and movers in the world’s largest electronics market. Mobile Geeks delve deep:
If we take a snapshot of the world’s global smartphone market, we can see that in Q2 2014 it grew by 23% to reach a total of 292.4 million units. Of that total, some 37%, or 108.5 million units were shipped in China – that’s a phenomenal figure that means that globally speaking, 1 in every 3 smartphones sold, is sold in China.
The Xiaomi RedMi: The Weapon of Choice in the Battle for Market Share
Of that 108.5 million units sold, Xiaomi represent 14% with a staggering 15 million units. Exactly what kind of mix that includes in terms model is less clear, but it would appear that the most affordable RedMi models represent the largest portion.
According to Shanghai-based Canalys analyst Jingwen Wang:
“In particular, its affordable RedMi range is booming and has been the driver for growth, despite attracting less global media attention than its flagship Mi products.”
It’s clear that the RedMi (or HongMi as it is known in Chinese and means literally small red rice) is a product designed, marketed and priced specifically to gain market share in China. The popular MIUI Android UI is designed to be as locally relevant as possible with software and services that are marketed at the local level.
Here in Taiwan the RedMi 1S (the latest version of the popular RedMi smartphone) is available for just NT3,999, which translates to around $135 USD. For a 4.7 inch, 720p smartphone that runs on a Qualcomm Snapdragon processor and sports an 8MP camera, the RedMi 1S is absolutely incredible value. It is little wonder that the RedMi series has spearheaded the company’s incredible sales performance on the Chinese Mainland.
What of the Big Two, Samsung and Apple?
The rapid and incredible rise in shipments from Xiaomi in Q2 of this year also means that they actually managed to eclipse some pretty serious competition from two of the world’s global heavyweights, Samsung and Apple. Xiaomi’s ascent means that Samsung actually slid to the number two slot for the first time since Q4 2011. It dropped from 15.5 million units shipped in Q2 of 2013, to 13.2 million units, a drop of 15%. Some of this could be due to the Korean company realigning its inventory to include more 4G offerings, in line with China Mobile’s recent 4G push. However, I think it is totally fair to say that extremely stiff competition from Chinese vendors has also had a massive effect – especially in the case of Xiaomi.
Apple has benefited from the recent uptake of 4G services in China, having a strong showing that saw shipments up by 58% year-on-year. The iPhone is one of relatively few 4G capable high-end devices that are offered by China Mobile. Having said that, Apple remains outside of the top five in the Chinese market.
China’s Top Ten Smartphone Vendors
The list of the top ten smartphone vendors contains eight Chinese companies. I am sure you could easily guess that Samsung and Apple are the only non-Chinese vendors to make the top ten.
[note: the actual order of the companies listed may vary according to source]
The list contains a few companies that will be lesser known to many of us in the West. While Lenovo is well known for taking on IBM’s notebook business and the Think Pad line of products, Yulong for example will be far less familiar and are in fact more widely known for their CoolPad brand of phones and tablets. Huawei and ZTE are huge players in China, boasting 90,000 and 140,000 employees respectively, just to give you an idea of the sheer scale of these two massive companies.
Oppo Electronics are somewhat familiar to us at Mobile Geeks (we recent reviewed their flagship Oppo N1 smartphone). Oppo is the company that gave birth to disruptive startup OnePlus, and are in fact a subsidiary of BBK Electronics who themselves claim 7th on the list. K-Touch are less well known to us, other than that they are based in Beijing, have been around as a brand since 2007 and employ around 2000 people.
The Global View: The Chinese are Coming
Despite losing ground in China, Samsung remains the world’s top smartphone vendor as of Q2 of this year. The Korean manufacturer sold 76.1 million units in that period, which is actually slightly up from the same period last year when it sold 75.6 million units. Apple sits in second place, but remains way behind on 35.2 million units, slightly up from last year’s 31.2 million.
The largest Chinese vendor in terms of global shipments is Huawei who have doubled their global shipments with a year on year improvement of 10.4 million to 20.2 million units. Lenovo are third globally with 15.5 million, up from 11.3 million last year. Xiaomi have now broken into the top five, just behind Lenovo with 15.4 million.
Overall we see a picture where Samsung is gradually facing pressure from predominantly Chinese vendors. In a year where global shipments expanded year on year by 67 million units, Samsung saw growth of less than one million. This is while Xiaomi saw 240% year-on-year growth, with Lenovo and Huawei also seeing very significant growth.
These results 2014 show how the larger Chinese vendors are gradually transposing their success domestically to the broader global sphere. This trend looks set to continue with companies like Xiaomi set to expand in to Indonesia, Mexico, Russia, Thailand and Turkey in the next six months.
This comment from Canalys analyst Jessica Kwee pretty much sums up the challenges that face Xiaomi as they continue to expand beyond China:
“Xiaomi needs to build its international brand, and will need to localize its services offering with MIUI for the different markets into which it expands, else its differentiation, value proposition and service-oriented revenue streams will be eroded. And it must tailor its marketing and largely online sales channels accordingly. That said, Xiaomi does have the potential to be a disruptive force beyond China and international vendors should take note.”