under 5G upgrade tide, the Chinese phone makers are turning to domestic market to survive?

2020 is considered the year of the popularity of 5G mobile phones, and June is about to mark the first anniversary of 5G commercial. One bad news, however, is that the impact of the covid-19 outbreak on the mobile phone industry is continuing. Following the Chinese market, India, the United States, Europe and other overseas markets have also ushered in difficult times. With factory shutdowns and stagnant offline sales, handset makers  are having their toughest year.

Originally chinese players planned to vigorously explore overseas markets  , strategic layout has also been disrupted, they will focus on the direction of return to the Chinese market. How to deal with the challengeof the global layout of the outbreak, and whether to grasp this year’s 5G  opportunities, will be the key factor for manufacturers to survive this “cold winter”.

India, Europe: Overseas frustration

Earlier this year, the outbreak of the covid-19 was the first to break out in the country. As a result of various preventive and control measures, offline business has also been seriously affected, including the mobile phone industry.

The stagnation of supply, production and sales in the upstream supply chain, manufacturing plants, mobile phone companies and offline stores has caused china’s mobile phone market to decline sharply in January and February.

At first, the  companies that were able to breathe a little breather was the onesthat had a deep presence in overseas markets. Wu Qiang, vice president of OPPO, has said that because of the outbreak, OPPO has re-examined its global market presence. In the global layout, OPPO needs to do a good job in each market, so that the changes in a country will not have a significant impact on the overall operation of the company.

Throughout January and February, mobile phone manufacturers, while actively promoting the resumption of domestic production, on the other hand, are also planning to vigorously explore overseas markets to ease the pressure of the decline in the Chinese market.

What manufacturers didn’t expect, however, was that while the chinese market was gradually under control, the overseas outbreak was experiencing a major outbreak. Among them, domestic manufacturers focus on india, Europe and other markets are particularly serious.

5G change on the eve of the change: overseas stagnation by the Chinese market to save lives?

India’s streets after the lockdown

On March 25 this year, India announced a 21-day national blockade to contain the spread of the epidemic. Subsequently, two more announcements were made to extend the national blockade, which has now been extended to 17 May.

During the period of lockdown, domestic manufacturers can be said to have suffered heavy losses. On the one hand, in order to reduce the tariffs on mobile phone products in India, manufacturers mostly choose to lay out local production plants, and during the closure of the country, these factories are mostly in a state of shutdown;

India’s smartphone shipments reached 33.5 million units in the first quarter of 2020, up 12 percent from a year earlier, according to Market Research. This is mainly due to the fact that the outbreak blockade occurred at the end of March and therefore had a limited impact on the first quarter. Canalys expects India’s smartphone shipments to plummet in the second quarter of 2020 as the outbreak continues into May and suppliers will have to grapple with supply and demand in the near future.

The outbreak in Europe is also extremely serious, and these markets are the second granary for domestic manufacturers to focus on, as well as the market with high premium potential. However, the European market relies on operators and offline channels mainly, the proportion of online sales is not high, which also makes its mobile phone sales have a greater impact.

At the end of March, Huawei’s flagship P40 series was launched overseas in France, the first time Huawei has fully pre-installed its own HMS service. However, Yu Chengdong, CEO of Huawei’s consumer business, admits that it will take time to promote HMS phones because of the current outbreak in overseas markets, which has prevented the shops from going on.

Strategic Readjustment: Weighing the Chinese Market

From the earliest hard-hit areas, to today’s first control of the outbreak and production and life towards recovery, mobile phone manufacturers for the Chinese market strategic layout can be described as a twist and turn.

In fact, from the data point of view, January and February domestic mobile phone sales have a greater impact, from March onwards, a rapid recovery, and even year-on-year growth.

OPPO Vice President Wu Qiang revealed that the entire industry in February sales of only 50% last year, OPPO February sales are only a little more than 50% compared to the same period last year, but the end of February sales figures have returned to the level of the same period last year.

Zhao Ming, president of Honor, also said that since honor resumed work in February, daily sales on-line have grown rapidly and far exceeded the same period last year. In March and April, it also saw year-on-year growth.

With China’s recovery and overseas markets stagnating, manufacturers have adjusted their strategy in the global market, tilting their focus again stilettos the Chinese market.

5G change on the eve of the change: overseas stagnation by the Chinese market to save lives?

Liu Zuohu and Luo Yonghao Live

Previously, sales of OnePlus phones came mainly from overseas markets such as India and Europe. This year, the OnePlus phone has stepped up its investment in the Chinese market. A comparison is different from previous styles, with OnePlus, which has always been relatively low-key in marketing, teaming up with Luo Yonghao, who recently made live-streaming. OnePlus CEO Liu Zuohu said he hopes to get OnePlus “breaking the loop” in marketing to reach more users through Luo Yonghao.

In the domestic channels, before OnePlus mainly cooperate with JD.com , and this year OnePlus has added Tmall, Suning,  and other distribution channels, expanding a number of new channels. Mr Liu expects OnePlus’s share of sales in China to rise this year.

Recently, OPPO a series of personnel adjustments by the industry attention, in fact, there is a focus on China.

OPPO first appointed veteran Liu Bo as president of China. Liu Bo’s experience in the supply chain is important for the resumption of production and sales in China, and then another veteran of brand marketing, Liu Li, announced his return, taking over as President of Global Marketing, while also serving as CMO in China. Two personnel adjustments, the intention to focus on deep cultivation of the Chinese market is obvious.

However, competition in the domestic market will be more intense this year as many manufacturers shift their focus to the Chinese market. On the one hand, the impact of the outbreak, research agencies expect the chinese market this year the overall sales of mobile phones will face a decline, and no incremental can let the final players eat, on the other hand, because Huawei glory as early as last year in the focus of the domestic market, the domestic share of the two once more than 40% or even close to 50%. The competition for stock among manufacturers will intensify. Take glory as an example, saying that this year to fully sprint China’s second goal, if achieved, Xiaomi, OV and other manufacturers’ share is bound to be hit.

Compete for 5G switching and new entrances

Although there are outbreaks of black swans, but this year the mobile phone market also has a new variable: 5G upgrade. In a clear sign, handset makers have been speeding up the pace of new machines since February.

One more representative is vivo. Since February, vivo has launched a number of 5G phones at various price points. Examples include iQOO 3 (from 3598 yuan), vivo Z6 (from 2298 yuan), NEX 3S (from 4998 yuan), vivo S6 (from 2698 yuan), iQOO Neo3 (from 2698 yuan).

Xiaomi, the introduction of Xiaomi 10, Xiaomi 10 Pro, Redmi K30 Pro, Xiaomi 10 Youth version and many other 5G mobile phones. Earlier, Lei Jun had revealed that Xiaomi’s plan this year is to release more than 10 5G mobile phones.

In fact, sales and penetration of 5G handsets have indeed been rising so far this year. According to the data of the Xintong Institute, from January to March 2020, 89 new models will be listed, including 13 models of 2G mobile phones, 22 models of 4G mobile phones and 43 5G mobile phones. From January to March 2020, the total volume of domestic mobile phone market was 4.8953 million units, of which 14.06 million were 5G mobile phones.

But it is worth noting that, although the penetration rate of 5G mobile phones is increasing, the current market sales accounted for the largest 4G mobile phone. Several mobile phone executives expect that this year’s 4G and 5G handsets will coexist for a long time, which also means that the shift to 5G and the introduction of 5G new products is important, a little careless will make a serious mistake.

In addition to 5G phones, there are new opportunities for 5G, and there is an explosion of IoT products. Among them, many mobile phone manufacturers are attracted to smart Television.

Previously, Xiaomi and Huawei Glory had expanded their product lines to smart TVs/smart screens, and the two were struggling to understand the switchboard ads. At the heart of the story is the sales battle.

Since then, almost all major handset makers have announced their entry into television. According to the plan, OPPO, OnePlus and Realme’s TV products will also be unveiled in the second half of this year, when the Chinese TV market will be more lively.

Behind the TV battle is the battle for the new entrance to the IoT. If the phone is the entrance to the personal IoT scene, then the TV is regarded as the entrance to the home IoT scene, on the other hand, the mobile phone manufacturers in the mobile phone difficult to have a larger increase, to develop diversified revenue helpless action.

OPPO’s previous personnel layout also has this consideration. In addition to his new role as President of China, Liu Bo also has the position of President of the Emerging Mobile Terminals Division, whose main task is to be responsible for opPO’s layout in the IoT field. Liu Bo once revealed to Sina Technology that after smart headsets, smartwatches and smart TVs, OPPO’s new products in the IoT space will accelerate.

In addition, changes in the lifestyle of users during the outbreak are also bringing new opportunities. The explosion of online education, telecommuting and other scenarios is stimulating the demand for large-screen products such as PCs, tablets and televisions.

Honor President Zhao Ming has revealed that during the outbreak of the glory of PC, tablet products in a state of in short supply. Recently, Huawei even launched an educational tablet product specifically for the student community, which is also to tap into the new user needs under the outbreak.

Conclusion:

Data released by IDC showed that china’s mobile phone shipments fell 20.3 percent year-on-year in the first quarter of 2020, the largest decline in the region. The United States and Western Europe, closely followed, fell by 16.1% and 18.3%, respectively.

Predictably, the Chinese market will gradually recover in the second quarter, while markets such as the US, Western Europe and India may see a more severe downturn. In the 5G  upgrade tide and the impact of the outbreak of these two factors, mobile phone manufacturers will usher in a very difficult year, and the global and Chinese market, will usher in new changes.

Survive, and do not fall behind, will become this year’s various domestic manufacturers, need to deal with the difficult challenges.