Cheap Chinese Smartphone Terrifies Local Rivals

      January 06, 2016 11:03

      Chinese electronics company Xiaomi began selling a new smartphone online here on Tuesday at rock-bottom prices, but sales were halted less than a day later.

      Internet shopping mall Interpark joined hands with KT to market Xiaomi's latest smartphone, the Redmi Note 3, for just W69,000 (US$1=W1,190). It was not only cheaper than the W160,000 it costs in China, but KT also offered 20-percent discounts on monthly charges, which meant it gave the phone away practically for free.

      But eager customers were soon told that sales were being stopped. The cheap Chinese smartphones were expected to generate huge ripples in the domestic smartphone market, which is dominated by Samsung and LG's pricier products.

      That Interpark suddenly stopped the sale has prompted suspicions of pressure being brought to bear by domestic competitors to pull the plug.

      The Redmi Note 3 was released in China in November last year, and less than a month later more than 10,000 had been bought by Koreans on Chinese online shopping sites.

      The Y6 smartphone by Chinese maker Huawei, which went on sale here last month through LG Uplus, sold more than 10,000 units in a little more than two weeks.

      The explosive popularity of Xiaomi and Huawei phones was the main reason that the market share of Korean smartphones in China fell to single-digit level.

      Samsung, which ranked first in China until early 2014, has slid to No. 5. Xiaomi, which was established just six years ago, has grown to take a 15.7 percent market share as of the third quarter of 2015 while Samsung has only 7.2 percent. LG's share is less than one percent.

      Until recently the only advantage Chinese smartphones had was their price, but quality has improved enormously.

      "Consumer perceptions of Chinese products being cheap knockoffs are changing quickly," said Jung Ok-hyun at Sogang University. "We're going to see not only Chinese smartphones but other Chinese IT products grab a larger piece of the Korean market."

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