New Chinese smartphones fighting for room in crowded market

New Chinese smartphones fighting for room in crowded market

Elbows are getting increasingly sharp in China’s smartphone world as a flood of new phones hits the market. It is particularly crowded in the low-end market – one dominated by Xiaomi.

SINGAPORE: ZUK, QiKu and LeMax are just a few of the new kids on the block that you have probably never heard of.

But then again, five years ago the same might have been said of Xiaomi, now the world’s fifth largest smartphone maker.

Zuk belongs to tech heavyweight Lenovo, QiKu is a joint venture between Coolpad and antivirus software company Qihoo 360 and LeMax is the new phone from LeTV – the YouTube of China.

They all offer impressive specifications but manageable price tags; the ZUK Z-1 will set you back US$283, the QiKu Luna US$239 and the LeMax US$393.

It is a price model Xiaomi perfected years ago.

“They’re posing a threat no doubt (but) Xiaomi is a bit more innovative,” according to Ajay Sunder from Frost & Sullivan Asia Pacific.

“One, Xiaomi is going to different markets and trying to manufacture from these locations themselves. Second, Xiaomi has maintained a very good online presence through online exclusivity,” he said.

Xiaomi is already assembling its phones in India and Brazil, at a time when smartphone growth in China is at a virtual standstill.

Smartphone sales in China fell for the very first time in the second quarter, down 4 per cent on year according to Gartner, and shipments are expected to grow just 1.2 per cent this year, a dramatic drop from the 19.7 per cent growth seen in 2014.

For the newcomers, their push into the market could be a little late, said Tay Xiaohan, market analyst at Client Device Research.

“It’s important for them to differentiate through software. LeTV has done quite a good job by differentiating through its ability to provide content. But even with that, I don’t think it can become one of the top vendors anytime soon in the market, simply because there isn’t space for them,” she said.

They could find that space by moving upstream, towards mid-range phones – something Huawei had done quite successfully. There is also opportunity in other markets; Xiaomi has also expanded into Malaysia, Thailand, Vietnam, the Philippines and Singapore.

“Indonesia and Myanmar will be two big markets. And we’re already seeing some of the other Chinese competitors trying to make headway into these markets,” Sunder said.

But even that could be tricky because most markets already have at least a few strong local players.

Add it all up, and experts said China’s low-end smartphone makers are headed towards one fate - consolidation.

"I think we’ll see consolidation because there are too many of them right now. The top three players make up 50 per cent of the low-cost market, and after that it’s mixed by 20 other players so they get a small pie,” Xiaohan said.

Source: CNA/jb