The “mass counterattack” of domestic smartphones hides hidden concerns

For domestic mobile phones, which were once regarded as "copycats", it is no longer a distant dream to compete with Apple and Samsung. According to the second quarter data, domestic smartphone brands occupied four of the top five sales rankings.

The counterattack of domestic products, which has been expected for many years, has officially begun when domestic mobile phones represented by "China Cool Alliance" have entered the mainstream market in a big way.

However, the "road to rejuvenation" is doomed to be bumpy. The brand premium ability is weak, the innovation and R&D ability is insufficient, the bargaining power in the industrial chain is not high, and the core patent reserve is insufficient... These labels that have always accompanied domestic mobile phones have not been completely removed. They are like the shadows reflected by the majestic image of "glorious rise", buried on the road of domestic mobile phones to continue to move forward, and urgently need to be broken.

Road to revival

"I used to only use Apple, but now I think Xiaomi and Huawei are also good and the prices are cheap," said Wang Xiaoye, a white-collar worker in Beijing, which reveals the changes in the domestic smartphone market.

From being a "copycat" that was not even worthy of being on the market, to gradually occupying the domestic market, and then going overseas to find new markets, it took less than four years for domestic mobile phones to make a comeback. Data shows that the sales volume of domestic smartphones increased from 16% in 2010 to 72% in 2013, and the global market share jumped from almost zero in 2010 to 33.8% in 2013.

These four years are also the four years when smartphones have become more popular and popular. Domestic smartphones seized the development opportunities of the surge in users and the high prices of foreign brands, and quickly swept the "blue ocean" of low- and middle-end consumer groups with "high cost performance" and "sea of ​​​​machines strategy".

Looking back at the “road to revival” of domestic mobile phones, cost-effectiveness and operator subsidies are important boosters that cannot be ignored.

While Apple fans are joking about "selling a kidney to buy a new phone", many domestically produced "thousand-yuan phones" are quietly eating into the market. Compared with the cheap products with poor performance in the past, the domestically produced phones with a price of less than a thousand yuan on the market now often have excellent performance in hardware indicators such as screen, chip, and camera.

Comparing foreign brands with the same configuration, it is not difficult to find that Samsung, Sony and other brands are generally 1,000 yuan higher than domestic brands. The extra 1,000 yuan is more of a reflection of brand value, in other words, it is a compensation for consumers' vanity. In the electronic product market where "new things are always new and old things are always old", most consumers do not have the ability to easily spend 4,000 to 5,000 yuan to replace their phones. Domestic brands with high cost-effectiveness just fill this demand. The development model of trading price for volume has led to a sharp increase in the market share of domestic brands.

On the other hand, the historical trend of the three major operators competing for the 3G market has promoted the prosperity of the "thousand-yuan magic phone" from a technical perspective. At the beginning of the upgrade of the domestic communication market from 2G to 3G, operators increased terminal subsidies and cooperated extensively with domestic mobile phone manufacturers. Relying on stable operator channels, domestic smart phones have been able to compete with foreign mobile phones. Lenovo Vice President Feng Xing once admitted that the main reason for achieving the first place in domestic shipments is that operator channels have achieved 70% of sales.

Hidden concerns

“Blessings often come with misfortunes, and misfortunes often come with blessings.” In the ever-changing market, the development dividends of domestic mobile phones have gradually turned into hidden worries.

Data shows that Apple took nearly 60% of the profits in the global mobile phone market last quarter , Samsung took 40% of the profits, while Chinese manufacturers made less than 1% of the total profits or even suffered losses. While leading the pack in terms of shipments and market share, the challenge that domestic manufacturers must face is how to balance price-for-volume and high profit margins.

In fact, this is not a completely new proposition.

Just ten years ago, domestic mobile phone manufacturers, which also won most of the market by price wars, withdrew from the stage of history at an astonishing speed under the squeeze of narrow profit margins. Who can still remember how the once-popular Amoi, Bird, and Panda mobile phones struggled and disappeared under the double pressure of high marketing costs and the lack of a profit model...

History always repeats itself. Ten years later, the "China Cool Alliance" is once again stuck in the price quagmire. Whether they are willing to face it or not, domestic manufacturers must think about whether the price advantage can still support domestic mobile phones to safely pass through the increasingly saturated "red ocean" market if Apple and Samsung also launch more cost-effective mid- and low-end models like Nokia and Motorola did in the past.

Also making life difficult for domestic manufacturers is the State-owned Assets Supervision and Administration Commission's requirement that operators cut marketing costs by 40 billion yuan in three years since this year. Shortly after operators responded to the requirement to cut channel costs, news of layoffs came from the "China Cool Alliance". Channel transformation has forced companies to "cut off their arms to survive." Take Coolpad as an example. Its executive vice president Li Wang once said that Coolpad will cut 50% of its models and reduce the proportion of operator channels. In addition, Coolpad will also lay off 20% of its employees.

Domestic manufacturers who have long relied on subsidies from operators are obviously unfamiliar with public marketing channels. The operating mode they are used to is to rely on the strong terminal distribution capabilities of operators to customize products according to requirements, which is obviously out of line with the industry development trend of being close to user demands.

Once the subsidies from operators are reduced, the good days of domestic manufacturers enjoying the dividends will also be doomed to disappear. The original closed and internal circulation characteristics will become a "stumbling block" for them to expand public channels. Although Huawei, Xiaomi, Coolpad and other manufacturers have already carved out a bloody path in the e-commerce channel, there is still a big gap for domestic manufacturers to achieve the market appeal of Samsung and Apple.

The solution

Hidden concerns have emerged. If domestic manufacturers do not want to repeat the mistakes of domestic mobile phones ten years ago, they must seize the emerging 4G wave and change with the trend.

In the face of the reality that there is little room for further price cuts, verbal battles or mutual sabotage are no match for returning to the product itself. Product is king, this is the eternal motto of the electronic goods market, and it is also the fundamental basis for domestic manufacturers to improve their brand premium capabilities.

Even though Apple and Samsung have encountered bottlenecks in their respective developments, their pursuit of excellence in technology and attention to detail have kept them at the top of the industry pyramid. Compared with the "sea of ​​​​machines" strategy of domestic mobile phones that frequently launch new products, Apple's operating model of honing one sword a year has been criticized for its single product category, but its attitude of pursuing perfection in every product is a "blind spot" for domestic manufacturers.

While maintaining the supply of low-end and mid-end customers, gradually rolling out more sophisticated high-end models to gain greater profit margins is undoubtedly a necessary step for domestic mobile phones to cope with the changes. Fortunately, domestic manufacturers have made attempts in this regard. Recently, Huawei Consumer Business Group CEO Yu Chengdong said that in the second half of the year, Huawei will streamline its product line and cut more than 80% of its models, most of which will be discontinued at the low end, and focus on high-end models.

On the other hand, users who have become "picky" in taste are increasingly reluctant to give domestic manufacturers too much time to imitate and follow, and instead expect more innovation and more dazzling performance. This urgently requires domestic manufacturers to overcome concerns about short-term costs and invest more energy in deepening technological innovation and improving user experience. Facing the baptism of the market with strong R&D capabilities and technological innovation is probably another hurdle that domestic manufacturers cannot avoid in order to achieve a real counterattack.

While consolidating products and R&D, how to open up marketing channels and establish brand reputation is probably a more long-term and systematic task. The power of "Apple fans" and "Apple madmen" is well known. Not every mobile phone manufacturer can attract thousands of fans to queue up all night and be heartbroken on the day of releasing new products. The degree of user loyalty to the brand directly determines the life span of the product. To achieve this, it requires not only a dazzling new product launch conference, nor is it just eye-catching "hunger marketing", but the manufacturer's true listening to user demands and tireless attempts to satisfy them.

Domestic mobile phones, dubbed as "group counterattack", are standing on the edge of a major reshuffle: should they be content with the status quo and remain so, only to repeat the same mistakes a few years later; or should they endure the pain and actively seek change, hoping for a more ideal future? This will test the decisions and wisdom of domestic manufacturers.

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.