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Domestic firms missing out

By Geng Wenxin (Global Times)

08:08, June 15, 2012

Despite having a large share of the market, domestic smartphone makers are not making as much profit as the international brands Apple and Samsung, experts told the Global Times yesterday.

"Domestic smartphone markers like ZTE, Huawei, Coolpad and Lenovo together own more than half of the total market," Zhou Ling, an analyst at Beijing-based consulting company Zhengwang Consulting, told the Global Times yesterday.

"It's not right to say that Samsung and Apple dominate the Chinese smartphone market. But it's true most of the profits in the sector are going to those two," Zhou said.

Statistics from market research company iiMedia Research show that in the first quarter of 2012, a total of 28.95 million smartphones were sold domestically, up 103.7 percent year-on-year.

Samsung accounted for 22.8 percent of the total sales volume in the period, and Huawei, Coolpad, Lenovo, ZTE and Apple followed with 11.6, 11.2, 10.8, 9.7 and 8.5 percent respectively, according to iiMedia.

The number of smartphone users in China hit 252 million by end of March, the data showed.

Chinese smartphone consumers are still largely price sensitive. Mid- and low-end smartphones were most welcomed, according to iiMedia. Smartphones priced under 1,500 yuan ($237.12) a unit made up 43.3 percent of the total sales in the first quarter, while high-end smartphones costing more than 3,000 yuan a unit only accounted for 15.5 percent of the total sales in the same period.

Tavis McCourt, an analyst at US financial services company Raymond James, wrote in a research note Wednesday that Apple and Samsung are the main beneficiaries from the Chinese smartphone market.

Domestic smartphone makers mainly focus on mid- and low-end smartphones, and although this area has the biggest growth potential, there are too many competitors and the price battle is too fierce, so there are only small profits to be made, Qian Linlin, an analyst at Shenzhen-based telecom market research company Telesys Consulting, told the Global Times.

But in the high-end market, even though there are fewer buyers, the profit margins are much higher. Because the consumers in this segment are more brand-conscious, Samsung and Apple can make higher profits, Qian said.

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