December 16, 2015 11:16
Korea's established smartphone makers are bracing themselves for an invasion of cheaper Chinese products that have much the same specs.
Huawei is now selling the Y6 smartphone in Korea via LG Uplus for a mere W154,000, less even than LG's mid-priced Gentle, which costs W220,000 (US$1=W1,183). And next year, Xiaomi plans to start selling smartphones in Korea for between W100,000 and W200,000.
That is in some ways alarming news for Samsung and LG, which have so far dominated the market here with their premium products.
Huawei released the Y6 in China, the Middle East, Europe and New Zealand in August. It features a five-inch screen, eight megapixel camera and 8GB of memory, which can be expanded with an external memory device.
"The camera can stand up to any high-end smartphone," a Huawei spokesman said. "It will offer the best performance for its price tag and appeal to pragmatic customers in Korea."
Huawei hopes to sell 100,000 units here and gauge the consumer response before releasing a wider range of models.
About a dozen low to mid-priced smartphones have been introduced in Korea this year that cost less than W500,000, but that is still a lot of money. In most other parts of the world, cheap smartphones can be had for less than US$200.
But domestic consumers have been loyal to Korean-made premium smartphones. From July to September last year, the two electronics giants controlled a combined 87.9 percent share of the domestic market. And the vast bulk of their products cost more than W400,000.
But the government began cracking down on excessive discount offers from telecoms in October last year, which led to increasing sales of low and mid-priced devices. Now they account for 30 percent of smartphone sales, and this is where Huawei hopes to make inroads.
Globally, Huawei has already overtaken LG to become the third-largest smartphone manufacturer. It sells more than twice as many smartphones as LG, and the trend could repeat itself here.
A staffer with a domestic smartphone maker said, "We can't make a profit by selling smartphones for around W100,000. Let's just hope the Y6 fails here."
But Jeong Ok-hyun at Sogang University points out that the differences between cheap and expensive phones gets ever smaller in terms of what they can really do for their users. "Domestic smartphone manufacturers will inevitably be impacted to a certain degree by the onslaught of cheap Chinese phones," he added.
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