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| People walk by a Samsung store at a main shopping area in downtown Shanghai, China, Feb. 21. Reuters-Yonhap |
No. 1 global smartphone vendor renews strategy for market of 1.4 billion consumers
By Kim Bo-eun
HONG KONG ― Attention is growing over whether Samsung Electronics will be able to regain its foothold in China's smartphone market, which it reigned over a decade ago, as the tech giant takes a renewed focus on the world's second largest economy.
Samsung accounted for almost 20 percent of China's market for smart handsets in 2013, but its share has fallen to less than 1 percent, as of the fourth quarter of last year, according to data from market tracker Counterpoint Research. The mere 0.6 percent share was backed by shipments of Samsung's latest foldable handset models to China last year.
The world's largest smartphone vendor was dethroned in China amid the rise of local competitors such as Xiaomi, Oppo and Vivo, which have catered to Chinese consumers' preference for lower pricing and particular mobile operating systems, while Samsung became irrelevant due to higher prices and a failure to localize.
Xiaomi's launch of its 1,999-yuan model ($316.69) disrupted the market with its high-spec features at an affordable price.
Samsung's fall is also associated with the conglomerate's poor handling of the 2016 Note 7 battery fire fiasco, as it did not recall models in China.
Apple, in the meantime, has taken the lead in China's market, taking up 22 percent as of the fourth quarter of 2021, despite being a foreign player.
"Samsung's products are not hip in China, really due to bad marketing," the Shanghai-based economist Andy Xie said in an email. "Samsung was the 'go to' product for young people a decade ago. Now Apple dominates. Samsung doesn't have an answer to Apple's appeal."
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| The latest iPhone models are on display at an Apple Store on the day the new Apple iPhone 13 series went on sale, in Beijing, China, Sep. 24, 2021. REUTERS-Yonhap |
What's driving Apple's popularity?
Apple's lead in the fourth quarter of last year is attributed to the launch of its latest iPhone 13 series, and an enhanced channel scheme, among other factors.
"Apple saw a favorable response to its iPhone 13 series, as the product was not only supported by a competitive pricing strategy and the decline of Huawei, but also by good supply chain management and better channel penetration," market tracker IDC said in a January report.
Besides commanding brand awareness, Apple has focused extensive resources over the long-term in China, to secure its market share.
Apple has more than 40 stores in China, as the brand's walk-in shops are essential for customer reach when selling pricey, high-end products, analysts said.
"People need to touch the products, feel it and test it in Apple Stores," Counterpoint Research senior analyst Ivan Lam said via phone. "Huawei learned the lesson from Apple that the flagship store is important to showcase how good your product is and why consumers need to pay more than 5,000 yuan in China to buy this product."
Recently, Apple has also taken a more flexible stance to its pricing strategy, which has enabled online platforms such as JD.com, Alibaba and Pinduoduo to offer subsidies for iPhone models ― resulting in discounted prices for consumers.
Key ingredients for Samsung's rebound
Samsung recently set up a new team to start fresh in its B2C business in China targeting 1.4 billion consumers.
"The team oversees Samsung's smartphones as well as household appliances businesses in China," a Samsung official said.
The head of Samsung's smartphone business Roh Tae-moon said at this year's Consumer Electronics Show in Las Vegas "China is a very difficult market. Rather than doing this in haste, we intend to seek gradual improvements with sufficient preparation."
This will no doubt be a tough feat for Samsung.
"We know that when Samsung goes back to the market, there is a lot of work to do. From the tech side Samsung is still leading, and it needs to take advantage of this to offer differentiated products and localization for Chinese consumers," Lam said.
"Localization and user experience are important to the Chinese, even if these are affordable smartphones."
This is emphasized at a time when smartphone vendors' flagship models have become increasingly homogenous, based on similar costs that come with using the same latest Qualcomm chipset or same high-spec camera components.
Samsung has led the niche market for foldable models, but Chinese competitors have stepped up their game in this segment as well. Huawei is in the commanding lead for foldable smartphones in China, with a 49-percent market share in 2021, followed by Samsung with 29 percent, according to data from IDC.
To maintain advantage, Chinese brands have offered localization, such as by integrating WeChat or AliPay in their models.
Another key challenge is for Samsung to carve an offline distribution presence. The offline market accounts for 65 to 70 percent of China's distribution.
"Channel penetration is very hard. Once you're gone, it is difficult to make a comeback, especially for offline. Online may be easier to enter ― but Chinese brands are also very strong online," Lam said.
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| People walk by a store advertising Samsung's Galaxy S22 Series in Hong Kong's Wan Chai district. Korea Times photo by Kim Bo-eun |
Samsung still a pick for Hong Kong consumers
Meanwhile, Samsung phones are more popular in Hong Kong, where it had 28.99 percent of market share in 2021, after Apple with 49.57 percent, according to StatCounter data.
"Samsung scaled down investments in China because its presence there was shrinking, but continued its investments in Hong Kong," the Hong Kong-based Counterpoint Research analyst said. "Hong Kong consumers care about brand names so the first choice is the iPhone and second is Samsung and other international brands instead of Chinese brands."
