Ringing in Change
Though latecomers in the international communications market, Chinese mobile phone brands have caught up quickly. In the 2G era, international communication standards and technologies were dominated by several foreign tech companies. Even China’s domestic market was controlled by foreign brands like Motorola and Nokia.
The rise of Chinese brands is attributed to technological advancements and a perceptive understanding of consumers’ needs. In the 3G and 4G era, China’s own communication standards and technologies began to grab some market share, which in turn boosted the growth of Chinese cellphone manufacturers and brands. After becoming a major player in the domestic market, Chinese handset brands began securing a foothold in the international market. Then they grew rapidly, accounting for the lion’s share in some foreign markets like Africa.
Pixels, screen sizes, operating capacities and other details are all important factors to consider when consumers choose a cellphone. Foreign brands like Motorola and Nokia began to wane in the Chinese market because they failed to catch up with Chinese consumers’ evolving demands. In the 2G era, consumers were satisfied with fundamental functions like making calls and sending text messages, but today, they use cellphones for taking photos, surfing the Internet, online shopping, watching movies and a whole lot more. Chinese brands, on the contrary, have made it because they cater to local consumers’ demands, which range from innovative games to making four-sim handsets.
Technological progress has also upgraded consumers’ requirements for cellphones. Today, the development of 5G wireless technology has brought new opportunities for Chinese mobile phone brands. Huawei, Xiaomi, Lenovo and others are gearing up to launch their 5G cellphones. It’s likely that Chinese brands will embrace another breakthrough like they did during the 3G and 4G era.
Insiders predict that in the 5G period, the Chinese market will need more than 1 billion cellphones, making it a battlefield where Chinese brands will cross swords with foreign competitors like Apple and Samsung. The key to grabbing a major share of the market is leveraging Chinese phone companies’ burgeoning investment in state-of-the-art design and research and development. Chinese communications companies have been harnessing big data, cloud computing, artificial intelligence and the Internet of Things for producing more hi-tech products and Chinese smartphones are getting smarter.
Nevertheless, Chinese cellphones still have a formidable barrier to overcome—the lack of core technologies. Barring Huawei, almost no Chinese cellphone brands manufacture their own core chips and are forced to buy the component from other countries. If chip providers stop the supply for some reason, a lot of China’s cellphone brands will face a crisis of survival.
The restriction Chinese multinational ZTE faced in the United States is a case in point. In April 2018, the U.S. Government barred the telecom giant from using components made in the United States, saying it had violated U.S. sanctions against North Korea and Iran.
How to address this potential Achilles’ heel is something Chinese cellphone makers need to crack in the future, no matter how tough a nut it is.