Reflections on iPhone's popularity in China: Is price-performance ratio really that important?

Recently, Apple released its latest second quarter financial report for fiscal year 2015. The most noteworthy thing is that the sales volume of its flagship product iPhone in China surpassed that of the US market for the first time, making it the world's largest iPhone market.

At the same time, compared with the strong performance of iPhone in China, Kantar Worldpanel ComTech's latest survey on the smartphone market shows that Apple iPhone's market share in the United States, Japan, Germany, the United Kingdom, Italy and Spain has declined for two consecutive months, but has maintained strong growth in China for four consecutive months. In January and February this year, Apple's share of the smartphone market in the seven major developed countries has declined. Why is the iPhone declining in most markets around the world, but growing against the trend in the Chinese market, even becoming the largest market for the iPhone?

Apart from the "show-off" mentality of some Chinese users that we in the industry often talk about (after all, it's not as simple as "showing off"), it may be more meaningful to analyze the reasons why the iPhone is so popular in the Chinese market from a deeper level, or from the perspective of our mobile phone industry itself.

I don’t know if the industry still remembers that most or mainstream mobile phone manufacturers in China have always regarded Apple as their goal to catch up with and surpass. The most specific and intuitive manifestation is that whenever they release a new mobile phone, they will compare it with Apple’s iPhone, or even humiliate it, to prove how innovative their mobile phones are. Of course, in addition to Apple, Samsung has also become the object of ridicule by domestic mobile phone companies. It seems that Chinese mobile phone manufacturers have suddenly become powerful overnight. “Kill Samsung and surpass Apple” seems to have become a fact. Little do people know that when our manufacturers, media, and commentators are standing up for our manufacturers, whether comparing Apple or mocking Samsung, the brand influence of iPhone in the Chinese market and among users is also being continuously improved invisibly. To put it more simply, our Chinese mobile phone companies are helping Apple expand and strengthen the brand and market influence of iPhone, whether they are releasing new products or using any marketing strategies.

Specifically speaking of products, in addition to the above-mentioned illusory so-called innovation that surpasses the iPhone, domestic mobile phone companies must also add a "price-performance ratio". In fact, this itself contradicts their propaganda slogan of surpassing Apple in innovation. Since our products are so valuable, why are they only sold at half the price of other people's iPhones, which reflects and embodies the value of the product or the most important symbol? Of course, we are not completely denying the role of "price-performance ratio". After all, China's mobile phone industry and related companies have made certain breakthroughs in quantity. However, when it comes to revenue and profit, especially profit, which truly measure the competitiveness of a product and enterprise, we either deliberately avoid it or change the topic and say "we are playing with ecology". Behind this is nothing more than covering up the huge gap between us and Apple.

What worries us more is that the actual result of the domestic manufacturers competing in "cost-effectiveness" is that the price is getting lower and lower. However, people in the industry know that in the mobile phone industry, even if the configurations look similar on the surface, the quality and cost of different components of different manufacturers are different, and will eventually affect the quality of the product and the user experience. Importantly, the normalization of this "cost-effectiveness" competition model may cause related companies to no longer focus on substantive product innovation, but instead focus on how to reduce costs in various ways. Recently, it was reported that some former Sony executives criticized the current CEO Kazuo Hirai for ignoring innovation and only focusing on cost reduction when evaluating Sony's decline, which deserves the attention of related domestic companies. The industry knows that Sony has always been famous for its cost or its emphasis on the so-called "small profits but quick turnover", but it eventually lost in the competition of Apple's innovative model.

Just as we kept mocking and claiming to surpass Apple, in addition to Apple's financial report this quarter, especially the performance of the iPhone, which sounded the alarm for us, the latest report from market research company Newzoo shows that in terms of revenue, Apple has become the number one technology brand in China. The report shows that Apple's revenue in the Chinese market last year reached US$37 billion, surpassing all technology companies outside and in China. In comparison, Huawei, Lenovo, and Xiaomi, which also have mobile phone businesses, only had revenues of US$17.5 billion, US$14.7 billion, and US$12 billion. As for profits and profit margins, Apple's was US$14.2 billion, 38%; Huawei's was US$2.1 billion, 12%; Lenovo's was US$800 million, 5.4%; Xiaomi's was US$1 billion, 12%. Our highest profit margin is only less than 1/3 of Apple's.

In summary, we believe that the reason why China’s iPhone sales surpassed the US market to become the world’s largest iPhone market is closely related to the blind optimism and improper market competition strategies of our mobile phone companies. In addition to the so-called “show-off” factor, we are more willing to believe that the real driving force behind the Chinese people’s rush for iPhone is our users’ desire for truly innovative products and brands (which also indirectly reflects the lack of such corporate brands and products in the Chinese market). This also reminds our related companies that “cost-effectiveness” is valuable, but the value brought by innovation is higher.

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.