Cheap Chinese Smartphones Put Limit on Samsung's Presence

Samsung Electronics seems to be struggling to expand its market share in China, the world's biggest mobile phone market. While its sheer size attracts competition from phone makers from around the world, local players like Huawei, Lenovo and Xiaomi are employing a high-quality, low-price strategy to beat out their foreign rivals.

According to U.S. market research firm Strategy Analytics, Samsung held a 19 percent share of the Chinese mobile phone market to rank first there in the third quarter of last year. But Chinese rivals have been snapping at its heels to fill out the top five -- Lenovo (10.9 percent), Coolpad (8.7 percent), Huawei (8.2 percent) and Xiaomi (5.1 percent).

Samsung is taking a two-track approach in China of securing its position with high-end smartphones and then gaining ground in the low- and middle-priced phone market by expanding its lineup.

In the market for budget models, Lenovo, Coolpad and Xiaomi are releasing smartphones for around 1,000 yuan -- prices at which Samsung cannot compete.

Xiaomis Mi3 /Courtesy of Xiaomi Xiaomi's Mi3 /Courtesy of Xiaomi

Despite their cheap price, the specifications of the Chinese smartphones are not very different from high-end models released by Samsung or Apple.

Xiaomi's Mi3 smartphone launched last year has similar features to the Galaxy S4, and all 100,000 units of its first batch sold out in 90 seconds due to its low price of W350,000 (US$1=W1,068). The company, which had only a 2 percent share of the market in the first quarter of 2013, is rapidly growing its share, taking up 4.5 percent in the second quarter and 5.1 percent in the third quarter.

The problem for foreign players like Samsung is that low- and middle-priced smartphones are dominant in the Chinese market. According to data from U.S. market researcher Gartner, smartphones priced below 2,000 yuan accounted for 85 percent of all those available in the Chinese market.

"As our products have proven competitive in the high-end market, we also expect good results in the low- and middle-priced smartphone market," said a Samsung staffer. "Based on our competitive products and close cooperation with Chinese mobile carriers, we will expand our presence there."

englishnews@chosun.com / Jan. 08, 2014 11:09 KST