Does it matter who is number one in the Chinese mobile phone market?

On the same day, as major domestic and foreign market research companies released data on global and Chinese smartphone market shipments and market share, a debate about who is the No. 1 in the Chinese smartphone market began. Due to different statistical and calculation methods, it is normal for market research companies to have different data. What is abnormal is that our mobile phone manufacturers always use statistics that are beneficial to their own market performance when promoting externally, and even make a big fuss about it.

Of course, they know very well that if they want to become the number one in the Chinese smartphone market, they must first surpass Samsung, after all, Samsung has always been the leader in the Chinese smartphone market. So taking the first place means surpassing Samsung, which is probably the real purpose of some of our domestic mobile phone manufacturers trying hard to prove to the outside world that they are the number one in the Chinese smartphone market. So is it really so important to be the number one in the Chinese smartphone market? Can it really prove that some of our manufacturers, or even our smartphone industry, have already led the development of the industry?

If we only look at the statistics of relevant market research institutions, although some relevant institutions have shown that some Chinese manufacturers (such as Xiaomi and Lenovo) took the first place in the Chinese smartphone market in the second quarter, we can still see that Samsung is still the first in the Chinese smartphone market according to the statistics of relevant institutions, and these are domestic institutions. Even if the statistics of most institutions show that Chinese companies have indeed taken the first place, that is only in the second quarter. After all, Samsung was still the first in the first quarter of the past, and there are still two quarters left this year, so it is hard to say who will become the first in the Chinese smartphone market throughout 2014.

In addition, from the statistics of relevant Chinese companies that have won the first place in the Chinese mobile phone market, there is one thing in common, that is, Samsung is still among the top three in the Chinese smartphone market, and the gap with the so-called first place won by Chinese companies is not big. At most, it is only 2 percentage points. For Samsung, whose quarterly shipments are 74 million units, it is easy to surpass the gap of these two percentage points (1-2 million mobile phones). In other words, in the eyes of Samsung, this gap is probably not a gap at all. However, Samsung still attaches great importance to it. It is reported that Samsung Electronics Vice President Lee Jae-yong will go to Beijing to hold an emergency meeting with Samsung China senior management to discuss countermeasures to suppress domestic smartphone manufacturers in order to save Samsung's market share in China. In contrast, our manufacturers are still working hard on who is the first, and even complacent.

Since we are talking about market share, we might as well turn our attention to the global market. Some people may say that we already knew that we would put Chinese manufacturers in the global market and compare them with Samsung. Is this comparable and fair?

Of course there are, because some of our current number one manufacturers in the Chinese market have all regarded overseas markets as their new growth point in the future. In this case, they naturally have to look at the global market, otherwise it would be unfair and even meaningless.

According to IDC statistics, in the first quarter, Samsung accounted for 25.2% of the global smartphone market share. The third and fourth Chinese manufacturers Huawei (6.9%) and Lenovo (5.4%) accounted for a total of 12.3% of the market share, which is only half of Samsung. Even if the market share of Chinese manufacturers that are not included in the statistics (due to low market share) but claim to have entered the overseas market (such as ZTE and Coolpad) is added, at best it is only slightly more than half of Samsung's market share. Of course, this is still achieved by our Lenovo and Huawei in the high-growth quarter of overseas markets (mainly emerging markets) (whether they can continue to maintain or even increase is unknown, but this is necessary, after all, our base is too low compared to others). As for individual manufacturers compared with Samsung, the gap is even more obvious. That is, from the perspective of Chinese manufacturers going global, we are far from surpassing them, and we have not even reached the level of challenge.

Next we are going to talk about revenue and profit. I don't want to say too much, but just quote the relevant statistics. In the past quarter, even though Samsung's profit fell sharply by 24%, it and Apple still accounted for 104% of the global smartphone profit. What we want to focus on is whether being the No. 1 in the Chinese market for a quarter (mainly surpassing Samsung) means that we have begun to lead the innovation and development of the smartphone industry?

The industry knows that the development of the smartphone industry has reached a bottleneck of innovation, which is true for Apple, which is known for its innovation, and Samsung, which controls the industry chain. So how can Chinese manufacturers, who do not have core technologies in the major links of the smartphone industry chain (such as chips, displays, cameras, flash memory, materials, etc.), lead the development of the smartphone industry? As industry analysts have said, the smartphone industry is highly similar to the traditional PC industry, and has entered a stage of competing in supply chain capabilities and scale.

At this point, some people may question whether Chinese manufacturers are using their scale to surpass Samsung (at least in the Chinese market). Isn’t this a contradiction? This is the crux and potential threat.

According to the scale of Samsung's smartphones and the self-sufficiency of some of its industrial chains, Samsung should be the leader in terms of scale. How could it decline instead of increase? The media attributed it to the cost-effectiveness of Chinese mobile phone manufacturers, but from Samsung's perspective, it is because it is unwilling to sacrifice profit margins, especially in the fiercely competitive low-end models that dominate the Chinese market. In other words, Samsung's previous strategy was to maximize profit margins even in the low-end market (this is evidenced by the fact that its shipments fell 3.9% in the second quarter, but its overall profit plummeted 24%). This indicates that Samsung can still gain growth in shipments by sacrificing profit margins in the future (with strong selectivity). No wonder some foreign analysts say that if Samsung puts pressure on and changes its practice of pursuing profit margins, it will be a disaster for Chinese manufacturers with low profit margins and still accumulating scale (either further improve the so-called cost-effectiveness, sacrifice profit margins, and maintain market share growth, or lose market share and maintain profit margins).

What worries us even more is that when the smartphone industry rarely changes the existing market structure through innovation, Samsung has already made efforts in the wearable device market, which is considered to be the successor to the smartphone industry. It has released five generations of smart watches so far. In terms of market effect alone, at least through the release of these five generations of smart watches, the experience Samsung has gained and its understanding of the market have laid a foundation that other manufacturers do not have for its possible explosive growth in this market in the future.

Similarly, following Google and Apple, Samsung recently spent $200 million to acquire the American company SmartThings to enter the smart home field. Earlier this year, Google acquired Nest and Dropcam, and in June, Apple launched the HomeKit application. The actions of these giants indicate that they have begun to lay out the next industry, smart home. Compared with the above real giants, we have no substantial thinking and actions in the above industries that may be new and can truly reflect innovation opportunities.

We are not denying the progress of Chinese manufacturers in the smartphone industry, but the recent tangle of some mobile phone manufacturers over who is the No. 1 Chinese smartphone manufacturer and that they have replaced Samsung to lead the innovation and development of the smartphone industry is meaningless (no matter who is No. 1, the market share is not much different). Instead of doing this, it is better to think about how to respond if the opponent changes his strategy? Or where is the opportunity in the next industry that is more valuable?

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.