As Samsung declines, has China Cool Alliance risen accordingly?

Currently, Samsung is facing a downturn in the Chinese market. The newly launched flagship Galaxy S5 is lacking in innovation and has been criticized by the outside world. Samsung is believed to have encountered an innovation bottleneck. Samsung's second-quarter revenue and profit both declined. Currently, in terms of second-quarter shipments in the Chinese smartphone market, Samsung has fallen from the top for the first time and has been overtaken by Xiaomi. In addition, the global smartphone market is shrinking overall, and Samsung continues to face patent lawsuits from Apple.

There are various signs that Samsung is in a clear decline, while another voice is that domestic mobile phones represented by China Cool Alliance are aggressively snatching Samsung's market share. Some industry insiders are even discussing the issue of China Cool Alliance and Xiaomi killing Samsung and Apple. Does Samsung's decline really mean that domestic mobile phones represented by China Cool Alliance have risen accordingly?

Before thinking about this question, let’s first look at the reasons why Samsung is showing signs of decline in the Chinese market.

The author believes that the first is the failure of Samsung's market strategy. One of the manifestations is that Samsung relatively ignores low-end models and takes the high-end route. However, at present, the high-end market has gradually become saturated. Although the growth of the domestic smart phone market has slowed down, the low-end model market has a large domestic mainstream consumer group and still presents huge room for growth. Domestic mobile phones, including most of the models of China Cool Union, are positioned in the low-end and mid-end, just at the outlet of the market. Even many domestic mobile phones with hardware configurations that are not much different from Samsung's flagship mobile phones have very obvious cost-effective advantages in price and configuration compared to Samsung's models of the same price. In China, whether it is a thousand-yuan machine or a market below 2,000 yuan, Samsung's mobile phones of the same price are sniped by many new thousand-yuan machines such as China Cool Union and Xiaomi. Samsung's product design and configuration in the low-end market are not particularly attractive to consumers. Domestic mobile phones in the low-end market have greatly impacted the sales of Samsung's flagship mobile phones in China.

Second, the changes in user needs and tastes and Samsung's inappropriate marketing strategy. Another aspect of Samsung's sales decline is the lack of research on China's national conditions and users. Domestic mobile phone manufacturers, including Xiaomi, have learned to get close to users through social media and play with fan economy from an emotional level. The "no longer feverish" Xiaomi 4 has won the interpretation of many industry and media people and the loud applause of Mi fans with its "artistic journey of a piece of steel plate", which has also improved the brand's style. As soon as the Hammer mobile phone was launched, it hit the user's pain points with "feelings". On the other hand, we clearly feel that Samsung, as a traditional mobile phone manufacturer, has performed very clearly, that is, it still pleases consumers through hardware configuration. Samsung rarely appears on social media platforms. Samsung's marketing strategy is still to invest heavily in media such as television media, which is not down-to-earth, but therefore ignores the emotional word-of-mouth marketing to fans through social media to drive the warming of the relationship with users.

Third, Samsung performed poorly in the 4G era and lacked investment in social channels. Currently, Samsung's 4G mobile phones include the LTE versions of note2, note3, S4, and S5, and 3G and 4G mobile phones are sold at the same time, basically at a price of 4,000 to 5,000 yuan. However, China Cool Union quickly rushed to 4G and laid out low-end product lines, which had a great impact on Samsung's 4G layout and sales. It can be seen that Samsung was too conservative in launching 4G mobile phones and lacked foresight in predicting the future market. In addition, in terms of social channels, the rise of Internet mobile phones has also had a great impact on Samsung's traditional channels.

If we think carefully, we will know that the factors that led to Samsung's sales decline are not enough to support the reason why Samsung will decline from now on. Because the saturation of the high-end market is partly determined by the economic environment, that is, the national income level, and the sales decline is partly due to the overall saturation of the smartphone market, the disappearance of the demographic dividend, and Samsung's market positioning errors, resulting in the low-end market being firmly controlled by domestic mobile phones. On the other hand, Samsung's downward trend is related to the failure of its marketing strategy and the homogeneity of hardware configuration in the domestic market. We see that although Xiaomi has surpassed Samsung in sales this year and ranked first in China, it is still exchanging profits for sales, and Samsung and Apple still account for more than 100% of the industry's profits.

Therefore, Samsung's declining sales and the impact of domestic mobile phones are not enough to prove that domestic mobile phones have risen accordingly. Because we know that China Cool Union is currently rapidly creating a considerable market scale, not relying on some irreplaceable core competitiveness, but on the long-term focus on the low-end market, playing the price-performance card, relying on price advantages and relying on customized channels of telecom operators, it was able to quickly occupy a number of shares of the low-end mobile phone market that originally belonged to Samsung, and achieved a beautiful result of nearly 50% of the domestic market share. In addition to low-end models, domestic high-end mobile phone models have been slow to mass-produce, which has become a common bottleneck for traditional mobile phone manufacturers such as China Cool Union. Due to the long-term focus on the mid- and low-end, profits have been diluted for a long time, and China Cool Union's mobile phone products and brand image have further solidified towards the low end. In addition, long-term reliance on telecom operator channels for sales has led to a gradual alienation between product design and experience and consumers.

Because of this, mobile phone manufacturers represented by Huawei have begun to focus on high-end models in an attempt to reshape their brands, changing the stereotype of competing on the number of mobile phones and sales, and instead learning from Apple and Samsung to promote high-quality and flagship products. Huawei Consumer BG CEO Yu Chengdong recently said that Huawei will "cut" more than 80% of its models, and the total number of models will not exceed 10. The main purpose of launching the streamlining strategy is to catch up with Samsung and Apple.

But what are the chances of success for domestic mobile phone manufacturers represented by Huawei in the high-end market? As mentioned earlier, the growth of the domestic smart phone market has slowed down, but the low-end mobile phone market still has a vast space and huge growth potential. China Cool Alliance abandons the low-end and goes to the high-end, which means abandoning its core user group and forcing itself into a dead end. HTC is a good negative example. In 2012, HTC once ranked first in sales in China through the "sea of ​​machines" strategy. Later, it reduced the number of models and switched to a high-end boutique strategy, which meant abandoning a large number of low-end and mid-end user groups that originally belonged to it. As a result, it was quickly surpassed by Samsung, which has more obvious advantages in all aspects, in terms of sales. HTC has been going all the way to the end and insisting on the high-end. Now HTC's decline is obvious to all.

In fact, ZTE has already made adjustments to its terminal strategy this year, that is, it has greatly reduced its product line and taken the high-end, high-profit route. However, ZTE's innovation, brand, design, and bargaining power in the industry chain of smartphones are not enough to support such a development model. As a result, the shipment volume has dropped sharply. The consequence of this strategy is that ZTE's position in the top ten of the global smartphone market is already in jeopardy. From Lenovo to Huawei, both of them have begun to enter the high-end market, and from the past cases of brands such as HTC, we can see that the reason why HTC failed to take the high-end route in domestic mobile phones is mainly because its scale, strength, brand premium, technical foundation and innovation are still far behind the giants, and it is not enough to form the ability to impact the high-end market.

But in the final analysis, domestic mobile phone manufacturers do not have the same unique core competitiveness as Apple in terms of control over the industrial chain, bargaining power, product innovation and the brand itself. They also lack Samsung's core technological advantages in hardware such as chips, cameras, sensors, CPUs, panels, memory and processors. From hardware to software to control of the industrial chain, Samsung and Apple still firmly hold the right to speak.

Therefore, it can be said that the absence of product brands, core technologies, and the ability to control the industrial chain is the direct reason why domestic mobile phones cannot impact high-end brands. Whether it is the most advanced chips, sensors and other core components, or mobile phone operating systems, domestic mobile phone manufacturers lack breakthroughs. Some people may say that the advantages of these core technologies do not affect the continued assembly and configuration of domestic mobile phones, and some even laugh at Samsung for being just a hardware manufacturer and lacking Internet thinking. It should be known that the advantages of the industrial chain controlled by Samsung can effectively control costs. Domestic mobile phones are accustomed to fighting hard in the thousand-yuan market with mobile phones of the same grade and higher configuration. However, if Samsung suppresses its opponents through strategies such as supply chain links, procurement and price links, then it will be a huge blow to domestic mobile phones. When Huawei released the world's thinnest mobile phone P1S, it died because Samsung refused to supply the screen. This is also the external driving force for Huawei to invest in the development of HiSilicon K3 and Kirin series chips.

Therefore, since domestic mobile phone manufacturers have been isolated from core technologies for a long time, their shipments are large but their profits are extremely small. The mobile phone industry is an industry where updates and technological innovations are very obvious. The future transformation risks faced by domestic mobile phones as technology followers are imaginable.

So we know that Samsung’s mistakes in domestic marketing strategy can be adjusted, but its core things such as brand premium, innovation ability, and production technology cannot be copied. As an international company with keen market response, technological accumulation and strong product research and development background, Samsung’s temporary sales decline can be improved through product design, market strategy adjustment and R&D follow-up. It is undeniable that Samsung has many problems, but overall, the decline in its terminal sales has been magnified due to excessive interpretation by the media, while domestic mobile phone manufacturers, under the halo of shipments and sales numbers, are concealing many fatal shortcomings.

Of course, looking at the entire domestic mobile phone market, China Cool Alliance, as a traditional mobile phone manufacturer, has accumulated a lot of product research and development advantages. Whether it is Huawei HiSilicon chips or ZTE's self-developed 4G chips and mobile phone systems, they all prove their efforts in this regard. In addition, the technology of domestic integrated circuits, chip manufacturing, and foundry companies has made a lot of progress compared to the past, but compared with Samsung's horizontally integrated supply chain monopoly advantage, the gap is still quite obvious.

Today, we see that the entire domestic mobile phone industry is still very impetuous, and domestic smart phones are more likely to be hot on the outside but empty on the inside. When celebrities, trainers, or crosstalk performers can all make mobile phones, we have to think about it. When the core components of mobile phone assembly have been prepared by others, and when we can attract fans, play with emotions, and make money by making mobile phones with cost-effective advantages, it may lead to the abandonment of technological innovations such as smart phone production design and R&D that require high costs and heavy investments to support.

All of this will inevitably be exposed when the next technological wave arrives or when international giants launch a supply chain war. The fragility of domestic mobile phones, which are big but not strong, will be fully exposed. When the core things are not in their own hands, mobile phone manufacturers will never have the right to speak, and they can only play the role of sparring. When the tide recedes, people will naturally know who is swimming naked.

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.