BEIJING, March 4 /PRNewswire-Asia/ -- CCID Consulting, China’s leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), recently released its report on China’s mobile phone market.
Mobile phone products were heavily influenced by the global economic downturn in 2008H2. The lack of innovative products and as consumer delaying purchase on the look out for 3G products, sales volume was weak. CCID Consulting reports that the sales volume in 2008 reached 161 million sets, lower than 185 million sets as estimated at the beginning of 2008. The market development slowed down.
Figure 1: Sales Situation of China’s Mobile Phone Market, 2006-2008
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Source: CCID Consulting, Dec. 2008
Mobile Phone Application Era Arrives, Open Technical Platform a Competitive Focus
In 2008, photograph, music and Bluetooth transfer have become mobile phones’ standard configurations. Mobile phones have more functions, such as DTV, mobile payment, GPS navigation, PTT talkback and wireless Internet access. Terminal manufacturers pay more attention to applications. Products equipped with electronic wallet, WiFi, Push-mail, DTV, PTT talkback, GPS navigation, information security and NFC/RFID emerged in the market. New technology available and new consumer demands gave way to the mobile phone application era.
In 2007, Apple debuted iPhone which featured an open technical platform, integrating a variety of content resources to mobile phones which bind users and contents, a core component in the application era. With the popularity of mobile Internet and its applications, more and more companies will follow Apple’s steps in developing open technology platforms. In July, 2008, Nokia announced that the launch of its open OS that would integrate Symbian OS, S60, UIQ and MOAP technologies; and its members could use this mobile phone OS through free authorization. Nokia’s decision broke the smart phone OS monopoly, as open technology platform become a competitive focus.
The Confusion of Scale and Profit
Advanced international manufacturers firmly stick to their position in the global market, with declining performances. On one hand, a weakening economic environment put the whole mobile phone industry in difficult times, with all international enterprises being seriously affected; on the other hand, manufacturers in new emerging market faces the dilemma of increasing output amid lowering prices, that although the international giants absorb most of the pressures to a fuller extent, smaller enterprises would still have to seek a subtle balance among scale, cost and profit.
Currently, both the upstream and downstream of China’s mobile phone industrial sectors, particularly terminal manufacturers’ profit space continued to shrink. Under an unfavorable economic environment, with demands slowing down, surging production costs and falling product prices, a considerable number of mobile phone manufacturers are seeing nightmarish performance figures, as reflected in the latest results of major mobile phone enterprises.
Compared with international giants, China’s domestic mobile phone manufacturers are at the edge of survival. On one hand, the global market slowdown hit China’s domestic mobile phone manufacturers, which are seeking opportunities in overseas market; on the other hand, due to a downturn in the economy and the rise of "shanzhai" products (a Chinese phenomenon referring to "non-brand" copycat products that feature multiple functions at incredibly low costs), traditional domestic mobile phone giants such as Bird and Amoi entered into a depressed situation, which is reflected by their dispositions of office buildings, shares or spin-off handset businesses. Under the attacks from foreign brands and shanzhai products, China’s domestic mobile phone manufacturers are in the need of transition.
Figure 2: Competition Structure of China’s Mobile Phone Market in Oct. 2008
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Source: CCID Consulting, Dec. 2008
Manufacturers Move to 3-4 Tier Markets While Brewing Channel Innovations
Manufacturers’ competition pattern and strategies directly affect the channels’ trend in the future. In 2008, Nokia cooperated with Synnex Technology International to launch NFD; Samsung actively set up its own channel system; although Motorola had unfavorable sales, it has been paying close attention to its channel policy. All international manufacturers deeply understand that although they have occupied first and second tier cities’ agents, retailers and consumers with their brand influence and product quality, the broad clime and different consumption habits determine whether they have the key to success.
Some China’s domestic manufacturers have found their position in 3-4 tier cities and country markets since 2007. They become new black horses in mobile phone market through multimedia products with high performance price ratio, fashionable appearance with high configuration and high channel profits. Different from channel strategy adopted by foreign manufacturers, many of China’s domestic manufacturers try their best to expand county and township-level market in 2008, through aggressively launching product publicity programmes through TV shopping and working with professional e-commerce websites in the market that focus on 3-4 tier market. It is expected that with the deepening of exploration to the 3-4 tier markets, as 3-4 tier market’s main sales force, the share of professional mobile phone stores will gradually increase over the next few years. However, it is unlikely that China’s domestic mobile phones would regain its sales peak as in 2003. When consumers build up some rational consumer awareness, China’s domestic mobile phones’ golden sales period will come to an end in the 3-4 tier markets. CCID Consulting forecasts that affected by scale, specialization and brand channel development trends and chain channels’ rapid expansion, the mobile phone market will see more situation-mobile phone chain stores, appliance chain stores and operators’ business hall.
Figure 3: Competition Structure of Retail Channels in China’s 4-5 Tier Mobile Phone Market in 2008
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Source: CCID Consulting, Dec. 2008
In 2009, the release of 3G mobile phone licenses will inject new power in a depressed mobile phone market, but the three 3G formats’ terminal industrial chains are not mature. In addition, user cognition and content application are at early stage, so the promoting role of 3G mobile phones is not evident in 2009. With operators’ competing in a new pattern and as the 3G market being formally launch, China’s mobile phone terminal market will greet its new round of growth period in 20010. The sales volume of mobile phones will exceed 200 million sets in 2011.
Figure 4: Sales Situation of China’s Mobile Phone Market, 2009-2011
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Source: CCID Consulting, Dec. 2008
About CCID Consulting
CCID Consulting Co., Ltd. (hereinafter known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: 8235.HK), is directly affiliated with China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu, with over 300 professional consultants after many years of development. The company’s business scope has covered over 200 large and medium-sized cities in China.
Based on major areas of competitiveness: industrial resources, information technology and data channels, CCID Consulting provides customers with public policy establishment, industry competitiveness upgrading, development strategy and planning, marketing strategy and research, HR management, IT programming and management. CCID Consulting’s customers range from industrial users in electronics, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks. CCID Consulting commits itself to becoming the No. 1 advisor for enterprise management, the No. 1 consultancy for government decisions and the No. 1 brand for informatization consulting.
For more information, please contact:
Cynthia Liu
Coordinating Manager
CCID Consulting Co., Ltd.
Tel: +86-10-8855-9080
Email: liuyan@ccidconsulting.com
