Chinese Consumers: A Shift to Domestic Brands on Tech Segments

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Market Background: Chinese Consumers on E-products

Chinese Consumers in ChinaChina, which has the largest population in the world, has taken the place of the United States to become the biggest market in the field of consumer electronic products, with one-third of global sales happening there annually.

Along with fast developing mobile network service in China, the total number of mobile phone users is approaching 0.4515 billion, which nearly means among three Chinese people has a mobile phone in use. Among them, 4G mobile phone units are around 0.171 billion and cover 37.8% of the whole market, 0.22 billion units covering nearly the half of the number are 3G mode and the rest are 2G units which are about 60.497 million representing 13.4% correspondingly. Meanwhile, the shipment of smartphones in 2015 was 0.452 billion units and the sales in 2015 was 0.378 billion units.

The other 2 main kinds of consumer products are TV and Laptop/PC. The sales of TV in 2015 was 42 million units and is expecting the same sale in 2016. And the sales of Smart TV is predicted to increase at least 30 million units. The penetration rate of smart TV is forecasted to increase from 56% in the year of 2015 to 85% in 2016. In terms of sales of computers, there are 2 main trends. One is high coverage and the other is that more and more consumers have more than one PC/Laptop products. According to another survey, 41.4% of respondents are planning to purchase new electronic products in 2016. Also, the main trend happening in the Chinese market is that Niche products are getting more and more popular in recent years. All the numbers mentioned above are indeed depicting a big market in China.

A Changing Trend

Although the consumer in the market for electronic products in China is growing rapidly in recent years, Chinese consumption custom is changing from purchasing international brands to local ones. The reality is that the majority of the market is held by domestic brands. Opportunity with more competitive challenges could be faced by foreign corporations.

In 2014, Chinese domestic brands hold about 73.4% smartphone market share. A recent study shows that in 2015, the top 5 sales of smartphones per unit in China were coming from Xiaomi, Huawei, Apple, Samsung, and Vivo, with market shares 14%, 11%, 11%, 10% and 9% for each in the descending order and with 99 million units sold totally. Among these 5 corporations, three of them are native in China, covering nearly 34% market share in the whole. Whereas the other 2, Apple and Samsung hold only about 21% of the market share. From these 2 reports, it is obvious that the Chinese domestic brands have larger market share, however, the profitability compared with Apple and Samsung is still representing a huge gap.

A recent research made on the Chinese TV market’s coverage rate shows that 7 of top 10 brands in China are native, even the first 3 of them are all domestic which are Skyworth, Hisense, and Changhong, taking over nearly half of the whole market.

In terms of the Laptop market, a report on a 2014-2015 comparison in brand attentions in PC market says the brand attentions of domestic brands have increased from 40.7% to 44.2% while that of international ones decreased from 59.3% to 55.8%. Among the top 15 Brands Attentions, a major trend from the year 2014 to the year 2015 is that local brands are getting more and more attention with some famous international brands decreasing such as HP, Sony,Toshiba and so on.

Future trend for the Chinese Consumers

From a recent research conduct by Daxue Consulting, there are three obvious key trends within the industry:

  1. High Definition/4K Resolution for the TV industry.
  2. The Wearable products that still has huge market potential.
  3. Smart/Connected household appliances which will integrate all electronic devices.

Undoubtedly, the Chinese consumer habits are changing towards the local Chinese brands. Chinese consumers often assume that local producers have a better understanding of local needs and offer lower price points but in the other hands these consumers also mention that foreign brands are often better made and more reliable regarding the quality.

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To know more about the Chinese Consumer’s behavior, contact us at dx@daxueconsulting.com!

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