Samsung shot to the top of the market in China and it is currently the No.1 smartphone vendor there by a wide margin in terms of shipment volume. But in a recent research note to clients, Wedge Partners analyst Jun Zhang wrote that things are changing rapidly in China and local brands will soon drive Samsung out of the top spot in this crucial market. “In China, a $300-$400 price range is considered the middle-range smartphone market, compared with the high-end market segment which is dominated by Apple, Samsung, Sony and other foreign brands,” Zhang wrote. “Local brands such as Xiaomi, Lenovo, Huawei, ZTE, Coolpad, Meizu, Vivo, etc. view this segment as their high-end smartphone segment, compared with Apple’s and Samsung’s flagship products retail price above $700.”
Zhang continued, noting that relationships with carriers and other retail channels are crucial to success in the mid-range smartphone market in China. He says local smartphone vendors have a huge advantage because they pay higher commissions to retailers despite the competitive pricing in the region.
“We think Lenovo will become the leader in the middle range smartphone market and we think the upcoming Vibe X will be selling in the $300-$350 range. We anticipate over 5 million units shipped in Q4,” Zhang said. “We think local brands will take share away from Samsung in the middle range market and its smartphone will soon lose its No.1 position in the China smartphone market. We think Lenovo and Huawei will become the No.1 and No.2 players in China.”