Chinese firms target greater share of smartphone market

Chinese domestic mobile producers are cashing in on the smartphone craze as they eye a bigger slice of the market which is dominated by Apple Inc. and Samsung Group.

At the on-going biannual Canton Fair, held from Oct. 15 to Nov.4, in the country's economic hub of Guangdong Province, producers are showcasing their self-developed gadgets.

At the fair, Pierre Cardelli, a representative with French retail group Auchan, said the company would purchase mobile phones from China because they now see less mimicking and a rise of indigenous designs.

"Manufacturers like Huawei can produce very advanced smartphones, and their core components are self-developed. The low-end products now just take up a smaller share in Chinese exporters' portfolios. The whole market has changed," said Cardelli.

FROM CONTRACTOR TO COMPETITOR

China exported more than one billion mobile phones last year, accounting for 80 percent of the world's total. However, producers received only a very small share of the overall profit, according to Liu Chun, secretary general of the China Chamber of Commerce of Machinery and Electronic Products.

"It is because the products were not carrying their own brand name," said Liu.

Huawei Technologies Co. is one firm that is starting to compete with Western industry leaders with its own smartphones.

The Shenzhen-based company is the world's second largest telecom equipment maker after Ericsson. It is the sixth largest phone maker in the world, with shipments of handsets totalling 12.9 million in the second quarter.

The company has research and development centers in the UK, Sweden, France and Italy, and employs 70,000 researchers. It provides hundreds of new models for European operators each year. But very few are branded as Huawei phones.

Shao Yang, the company's chief marketing officer, told Xinhua that it was not an easy decision for Huawei to shift focus, as it had little experience in the retail market.

"We knew we didn't have enough resources to support both phones for operators and a self-developed brand. We don't want to make Huawei phones low-tier, 100-dollar products. So we reduced production of mobiles for operators in the first half of 2012," said Shao.

Huawei initially had 14 operators in Europe but during its worst period, Vodafone was the company's only remaining contracted operator.

Things have turned around.

"We have made it through the worst," Shao said, noting that the Huawei P1, launched last year, has been well received. "The new flagship model P6 has been a huge success this year."

The company, which launched the P6 in June, predicts 10 million handsets will be sold by the end of the year.

Analysis from ABI Research, in New York, showed that in the second quarter of the year, Chinese companies ZTE, Huawei, TCL, Lenovo and Coolpad were ranked as the world's fifth to ninth branded phone makers in terms of sales shipments, surpassing Sony, Blackberry, HTC and Motorola.

The five companies together took up a 15-percent share of the global market of branded cell phones.

"This ranking counted the branded phones only, which means non-branded phones were excluded. Chinese companies' performances are actually impressive and exciting," Zhou Jianguo, chief technology officer of Changhong Electronics' mobile department said.

Three years ago, the Sichuan-based television maker entered the phone market. Its shipments reached eight million units last year, mainly exporting to central Asia.

"I bet Chinese mobile companies will be the third power after Samsung and Apple," Zhou predicted.

"The global market needs a third giant. Whoever it will be, it will be a Chinese company," Shao Yang of Huawei said. "What Samsung can achieve so can we."

FROM SHANZHAI TO INNOVATION

Chinese imitations and pirated brands and goods, known as "Shanzhai", are fresh in the memories of companies. Firms are looking to shake off being associated with the "knock-off" tag.

"Apple has the biggest industry influence, while Samsung owns the most complete industry chain. Huawei has very good global customer relations because we produce phones for so many carriers. But it's not enough," Shao said, "the only way out is innovation, and it has been proved by the market."

Shao said that Huawei spent seven months developing its P6 model. "Huawei is a tech-focused enterprise. We'll launch and promote a premium model every year, and we'll display our tech strength to the utmost."

Priced at around 500 U.S. dollars, similar to a Samsung handset, the Huawei Ascend P6 is equipped with a 1.5 GHz quad core processor and a 2000mAh battery.

"We want to sell our products at the right prices," Shao stressed. "High price for high quality, and what we earn we will invest again in technology innovation."