This has been a tough year for the smartphone industry globally. This has been especially true in China, where strict COVID lockdown measures have repeatedly stifled the economy. According to a recent report from Counterpoint Research, smartphone sales declined 14.2% year-over-year in the second quarter of 2022. The last time sales were this low, the iPhone 5 had just debuted. But by stealing features from the latest iPhone, one Chinese smartphone brand has seen significant growth while all of its rivals struggle.
Stealing iPhone features is a solid business model
Counterpoint’s Market Pulse report revealed that virtually every notable brand in China lost market share from the second quarter of 2021 to the second quarter of this year. Vivo, Oppo, Xiaomi, Huawei, and Realme all declined. The only major brand to see year-over-year growth last quarter was the Chinese smartphone brand Honor.
Honor started as a sub-brand of Huawei, but was sold to a state-owned company controlled by the Shenzhen government in 2020. Honor launched its first phone without Huawei — the Honor V40 5G — in January 2021. The company has released a number of new phones since then, including the foldable Honor Magic V earlier this year.
Honor didn’t seem like much of a threat to the top Chinese vendors a year ago. Now it is a true force to be reckoned with. As you can see in the chart below, Honor’s sales more than doubled over the last twelve months. Honor’s sales were up 103.3% year-over-year, while most of its rivals were down 30% or more in the same time span.
Why is Honor growing so fast?
Research analyst Mengmeng Zhang offered one explanation for Honor’s success:
HONOR continues its great comeback by expanding its offline presence. With the lockdowns hitting major cities, HONOR’s coverage in lower-tier cities, which saw fewer lockdowns, helped the brand steer through the turbulence in Q2 2022. It may be noted that HONOR managed to take share from all the leading Chinese brands, including Huawei, during the quarter. It is time for OPPO and vivo, known as the “offline channel kings”, to take HONOR seriously.
Counterpoint also provided another possible explanation: Honor is stealing features from the iPhone. As the report explains, “HONOR and Xiaomi have been benchmarking their high-end models against Apple by incorporating several iPhone features.”
Recent Honor and Xiaomi phones have adopted facial recognition and 120 Hz displays on the heels of Apple. Meanwhile, their phones cost significantly less than the latest iPhone. Stealing, copying, being inspired by — whatever you want to call it, it’s working.
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