Summary
Domestic mobile manufacturers of China is continuously capturing the global mobile market and becoming a threat for legitimate handset manufacturers. These handsets are flooding China’s domestic as well as international market. China's grey wireless handset shipments have grown by more than 43% in 2009. The situation looks set to deteriorate further for legitimate handset makers, with the grey market expected to reach 192 million by 2013.
Analysis
With the rise in average wealth of china, its starvation for smartphone is rising. In spite of decrease in mobile phone shipment globally by 4%, smartphone shipment in china is growing and is expected to triple by 2013. This shows that the world’s largest telecom industry based on mobile subscriber is moving towards high technology products. The analyst firm found that smartphone accounted for 15.3% of total handset sales in China in 2008, a 30% increase from 2007. But, how about getting this high tech product at a price almost half of the original one’s.
China’s grey mobile market which was virtually non-existent few years back is emerging as one of the fastest growing market and is mounting threat to the legitimate brands. It is expected to account for 13% of the world’s phone business by the end of this year. The shipment will soar to 145 million by the year end as per the data produced by the analysts. In 2008 150 million or 20% handset produced were either counterfeit or off brand phones and of those 51 million were sold in china. However due to the rise in domestic handset manufacturers such as Lenovo, TCL and squeeze in margin due to internal competition producers have started exporting aggressively.
They have started giving competition to high end segment mobiles like Iphone, Nokia N97 by manufacturing their indistinguishable version and make it available in the market at a cheaper rate. Cost conscious customers prefer the pirated version since they get all the sophisticated features and also the look of smartphone at a very lower rate. However the sector fares beyond depends mainly on whether piracy remains successful after 3G mobile services become the main stream and also till the time they get support from the government.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
