The impact of the outbreak of new coronavirus pneumonia on work and life is everyone’s witness. In order to control the spread of the epidemic to avoid crowd gathering, the population has reduced the frequency of travel, public transport and public places of frequency and opening hours have been significantly reduced, most enterprises have also delayed the start of work. As part of China’s business environment, the mobile phone market can not avoid being affected by the fate.
Whether it’s Apple, Xiaomi and other manufacturers’ off-line stores announcing the suspension of operations, or the loss of factory production capacity in the supply chain, or the planned launch of new products all turned into live online broadcasts, China’s mobile phone industry has undergone real changes.
It is not just China’s mobile phone market that is affected, research firm Strategy Analytics said in a recent forecast, China’s first-quarter mobile phone shipments will fall by more than 30%, full-year shipments are down 5% than expected, and the Chinese industrial chain closely related to the global mobile phone market will also be reduced by 2%.
In this outbreak, many enterprises that have experienced SARS have made more positive moves in order to smooth down. During the SARS outbreak of 2003, the mobile phone industry was no exception and all walks of life were affected, so it is necessary to review the past to see which ideas and actions are also valuable today.
Mobile phone sales decline disphoneded during SARS, but communication time increases
The SARS outbreak in China was mainly concentrated in the first half of 2003, from February to June, the first two quarters. This time period has been the mobile phone and the entire communications industry to release new products, set the year-round goals and strategies, but suffered from the relentless interference of the outbreak.
At that time, mobile phone sales are also very dependent on off-line channels, the outbreak of the emergence of fewer people to reduce the closure of stores and other measures, will inevitably lead to a sharp decline in sales performance. After a survey of mobile phone dealers in Beijing and Shanghai, J.P. Morgan analyst Xia Bowen said sales were down about 40 percent during the outbreak.
It wasn’t until late May, when the SARS outbreak was greatly eased and people were able to travel more freely, computer cities and mobile phone stores opened, that the mobile phone market began to return to its former life. During SARS, the decline in mobile phone industry sales, but also led to domestic manufacturers used to commission and one-to-one sales model by cost constraints and “failure”, the international brand short-term share of the rebound.
Fortunately, the decline in sales performance in the first half of the year did not affect much, with some 73.78 million mobile phones sold in China in 2003, up 8.24 per cent from 68.16 million the year before, according to analysing data released by Analysys International. China’s mobile phone market, which has experienced SARS, finally survived.
Subject to all kinds of mobile communications services also need to go to the entity office for the objective conditions, the three major operators of the user growth rate is reduced by the reduction of out of the door. According to the Beijing Entertainment News, the number of mobile phone users in China increased by 5.7 million per month in the first four months of 2002, to 5.02 million a month during SARS, and to 4.23 million in April 2003.
However, it is also in the premise of a significant reduction in people’s travel, communication needs across the country have been stimulated, users of telephone, sMS frequency increased significantly. In April of that year, China Unicom saw a 40 per cent increase in the length of user calls compared with the previous month. According to the Ministry of Industry and Information Technology statistics, the total number of new mobile communications users for the whole year 62.68 million, in line with the previous year’s expectations.
Since most factories were not in the high-risk areas of the year, the impact on China’s mobile phone manufacturing was less obvious, with 74.13 million handsets produced in the first half of 2003 in line with industry expectations. And the industry is also optimistic, PCB board supplier Showhua has said that the original target of 80 million global difficult to meet, but the domestic market is still nearly 60 million demand, can be the same as the previous year and continue to expand capacity.
International manufacturers slightly affected, basically smooth through
In 2003, 3G networks were just beginning to be put into use around the world, but China is still a long way from 3G, and is still the world of 2G phones. In addition to 3G and peripheral functions, the mainstream mobile phone selling points have entered the market: mobile GPRS Internet concept is emerging, color screen mobile phones began to be popular, color bells MMS has also become a period of fashion.
Even if there is a bright spot for consumers, whether international manufacturers or domestic manufacturers, are still unable to escape the SARS epidemic caused by the associated effects.
Motorola has said sales in the second quarter of the year were not meeting expectations because of a drop in consumer spending from Chinese residents affected by the outbreak. News came out on June 9th, and not only did Motorola’s own share price fall 3.6 percent, but it also fell along with shares of companies in the European and American telecommunications industries, such as Texas Instruments.
After a project manager was diagnosed with SARS, Motorola went into work from home on April 29th and was not relieved. Motorola’s Tianjin plant has also entered shift mode, with production slowing significantly. The planned launch and other events were also cancelled.
Nokia launched a more aggressive attack on motorola, then the market leader, in the international market, the game phone N-Gage and mobile phones with music, photo-taking capabilities, and the introduction of new CDMA models in China. However, Nokia also cut market expectations in the face of a less optimistic environment.
Samsung, which is preparing to make a big splash in the mobile phone market, was also affected by the SARS outbreak and failed to meet its sales targets for the second quarter of the year. In 2002, the Chinese market provided Samsung with $32 billion in sales, or 20 percent of its annual revenue.
But in the full-year dimension, all three international mobile phone manufacturers have weathered the SARS outbreak. Motorola-wide reversed its $2.5bn loss over the past year and posted a net profit of $893m; Nokia returned to sales and profits, accounting for 38 per cent of global shares; and Samsung mobile phones gained further in China.
In general, the outbreak cycle of more than a quarter did not affect the international mobile phone manufacturers in China’s market strategy, in addition to changing the way the outbreak works and slowing production speed, but basically according to the original plan. Due to the competitiveness of the product itself, coupled with the appeal of international brands, the full-year market performance is in line with expectations.
Although commercial losses have been suffered as a result of the outbreak, mobile phone manufacturers have reached out to help business companies with their social responsibilities. Nokia, Motorola, Alcatel, Siemens, Panasonic, Sony Ericsson, UT Starcom, Waveguide and other companies have donated mobile phone products, cash and medical supplies to medical personnel and related departments.
Domestic manufacturers seize the hidden opportunity of the epidemic
Unlike international manufacturers to brand image, high-end selling point-based market strategy, domestic mobile phone manufacturers at that time opened a price war, to seize the market from the former hands.
Some analysts predicted during the SARS outbreak that sales, which had fallen due to declining crowds, would press the pause button for an increasingly fierce price war. In fact, however, the special environment during SARS made the market strategy of domestic manufacturers more active.
Compared to the time to occupy the middle and high-end market also can not put down the international manufacturers, the price war of domestic mobile phones now seems very familiar: color screen, MMS, only to come, GPRS and so on is still fresh, and in the international brand price of thousands of selling points, to the domestic mobile phone into a thousand yuan level standard, with today’s words is full of price/performance.
On the other hand, domestic mobile phones also take advantage of price and other advantages, early set up a deep deep subsidence market of huge channels. During SARS, Beijing, Guangzhou, Shanghai and other first-tier cities are more serious, stores have responded to the request to suspend business at the same time. Third- and fourth-tier cities have not been greatly affected by their operations, and many points of sale are still open.
In this contrast, some mobile phone brands have even achieved a sustained increase in sales, domestic mobile phone market share began to surpass the international mobile phone brands. Low-cost, multi-functional, multi-channel strategy is undoubtedly feasible, by the end of 2003, domestic mobile phones access to more than 54% of the market.
This year, wave guide dropped 258 million yuan of marketing costs, with nearly 10 million units of the results to become the market share of the year’s first manufacturers. The relatively simple threshold and sales model of the mobile phone industry has made the price war a success, with sales of 2 molder units in 2003 than Motorola, which ranked second, after a sharp cut in prices and incentives such as cars to stimulate sales during SARS.
THE SECOND-RANKED DOMESTIC HANDSET OF THE YEAR, TCL, ALSO HAD A TERRIBLE SALES OF ABOUT 7.5 MILLION, AND THEN THE FRENCH MOBILE PHONE BRAND ALCATEL REACHED A PARTNERSHIP. Panda, Xiaxin, Kejian and other mobile phone manufacturers also handed over the expected answer, domestic mobile phones do not appear to be disturbed by SARS, a time scenery is no different.
This was followed by a series of downward series: both waveguide and other manufacturers, whose sales fell sharply over the next few years, eventually disappeared into the market. International players once seen as their biggest rivals live to the next era. Domestic mobile phones through SARS, but did not overcome their own problems.
Overall, the outbreak did not have a more serious impact on the mobile phone industry, but rather because internal problems led to the first reshuffle of China’s mobile phone industry. Choose to trade profit margins for sales, but the ability to innovate is limited to translate sales into long-term shares, and quality problems have led to tens of millions of levels of inventory, pushing Domino’s first card.
The performance of SARS period seems brilliant, also can not hide the first batch of domestic mobile phone manufacturers outside the strong in the essence of the dry, directly led to a few years after almost all out of the finale.
Online channels show their fists
Despite the chicken hair that fell, we can still find some wind direction, perhaps can become the current mobile phone manufacturers safely through the new corona pneumonia outbreak of the lights.
The power of sales channels can not be ignored, the actual number of users to buy the decline is not terrible, terrible is not able to reach the user of the product. Once the domestic manufacturers are to seize the opportunity that international manufacturers can not effectively enter the sinking market, in the adverse wind environment of the epidemic to play a series of tricks, become more consumer choice.
Now we want to pay attention to the online channel, it will become the first half of 2020 mobile phone sales of the main channel. Not only mobile phone product launch will start pure online, shopping and payment convenience, contactless distribution advantages also let online channels in this era can become mainstream.
New coronapneumonia is more powerful, more stringent isolation is required, and the impact on mobile phone sales may be longer due to the two-week incubation period. Shopping and opening are inconvenient, may make offline sales channels and outlets by a greater impact, may also prompt the original heavy reliance on offline manufacturers on-line large-scale efforts.
Because the outbreak has a longer duration, mobile phone makers are putting more effort into thinking about how to survive. Design, produce, sell, and deliver the entire process takes longer, but costs and bills are still running in their original cycle, potentially putting pressure on money.
What’s more, 5G-related research and development in the last two years has cost manufacturers a lot of budget, especially for relatively small manufacturers. Fortunately, after many rounds of shuffling, the Chinese market has survived so far mobile phone manufacturers have a stronger strength, due to the outbreak caused by the decline in sales and the possibility of capital break smaller.
5G is both pressure and opportunity, after a full year of warm-up and waiting last year, the market is in the process of a full upgrade of 5G key nodes. There is a large number of objective demands in the consumer community, which are expected to translate into market performance, and retaliatory consumption in the area has emerged after SARS, which could be repeated after the outbreak.
However, it is not too optimistic, after SARS, the impressive market performance can not be separated from the demographic dividend, and can not be separated from the entire national economy is in a period of upswing. Now China’s mobile phone market has been transformed into a stock market, not the same day as the big environment of the year.
Learn lessons and find the right way to locate and route them is the right way for mobile phone manufacturers to get through the difficulties smoothly.