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This is the era of the smartphone and it is one that has been dominated by two names: Apple and Samsung. These manufacturers are still the biggest sellers in the global marketplace, but they may not hold that position for much longer. The challenge is coming from Chinese companies and they are very serious about wanting to take over this market.
Increasing Chinese smartphone supply
One way in which China is making ever greater inroads into the smartphone market is on the supply side, as the number of Chinese smartphone manufacturers is growing. The companies from that country making these phones now include major names Huawei, Xiaomi OnePlus, Oppo and Lenovo, with the former in particular making giant strides. Huawei is producing phones like the Mate Pro 20 that are a match for Apple and Samsung when it comes to the top models for this year. This is important because Chinese firms need to be able to consistently match or better the quality of phones produced by the current market leaders if they are to dominate this sector in the future. The standard of the phones they are producing has made Huawei arguably the best-known brand of Chinese smartphone in global terms, and figures for 2018 showed that the company was steadily catching up on Samsung and Apple in worldwide market share: hitting 15 percent by the end of that year, compared with 18 percent for Samsung and 17 percent for Apple. Oppo and Xiaomi also made the list, with 8 and 7 percent of the market respectively and the increasing ability of these companies to make smartphones with more cutting-edge specs than those of Western firms is cited is one of the biggest reasons why they are fast closing the gap in the smartphone market share across the world.
Components and assembly
Huawei has announced that its strategy for dominating the sector involves taking 50 percent of the domestic market before overtaking Samsung globally, but the overall Chinese dominance could be about more than just phone sales. Due to its lower labour costs and its control of 50 percent of the rare earth materials used in their production, many non-Chinese smartphones are actually assembled in that country using components produced there. Both of the two biggest smartphone companies in the west, Samsung and Apple, have production bases in China. Apple in particular has a large number of its smartphone component and assembly facilities in China. While Samsung has a smaller presence there, it is another way in which China is taking control of this market without the phones actually needing to have the name of a Chinese company on them.
There is clear evidence that phone suppliers in China are fast catching up with Samsung and Apple, with Huawei having a clear plan for achieving this, but with control of the actual materials and assembly of these devices China could really be set to dominate the market in the near future.
June 10, 2019
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