Chinese Smartphone Sales Tipped To Fall 20% As Consumers Shun Brands
China’s leading smartphone makers including Oppo, Realme, Vivo and Xiaomi have been forced to scale back production as consumers shun Chinese communication devices, and Chinese lockdowns impact sales that are tipped to fall over 20%.
In Australia consumers see Chinese communication products as a security risk, they are also not happy with the bans that China is placing on Australian goods and are retaliating in the choice of goods they buy.
A recent research study by Delloitte reveals that Australians are more aware than ever before that their personal data is used by companies.
85% of respondents believe that the companies they interact with are using their personal data, up from a steady 80% over the last 3 years.
Also contributing to the fall in demand for Chinese phones is the month long COVID lockdowns in China.
Xiaomi, China’s biggest smartphone maker and No. 3 globally, has told suppliers that it will lower its full year forecast to around 160 million to 180 million units from its previous target of 200 million.
Both BBK Electronics the owners of the Oppo, Realme, Vivo and OnePlus along with Xiaomi were bragging late last year as to how they intended to grow sales up against Samsung and Apple.
Instead, brands such as the Lenovo owned Motorola Google and Nokia have stripped share away in several markets with Motorola growing share in Australia by over 50%.
Xiaomi shipped 191 million smartphones last year and was aiming to become the world’s leading smartphone maker according to Niki Asia.
Vivo and Oppo have been forced to reduced orders for this quarter and the next by about 20% in an attempt to digest excessive inventories currently filling retail channels.
The Chinese brands who are known for splashing millions with retailers to get prime shelf space are now struggling to hold onto share.
The downturn in demand for Chinese brands is believed to have impacted Harvey Norman mobile sales who punted big on Chinese smartphone brands in an effort to take on market leader JB Hi Fi.
Vivo whose products are sold at both JB Hi Fi and Harvey Norman have said that they will not update specifications for some key components going into some midrange smartphone models this year, citing efforts to reduce costs amid inflation concerns and dwindling demand, sources said.
Production forecasts for smartphone makers that are less exposed to the China market, such as Samsung Electronics Motorola and Apple, along with TCL who despite being a Chinese brand generate most of their sales outside of China, are relatively unchanged, according to multiple sources familiar with the matter, though even they are facing challenges from looming inflation and the Ukraine war.
Samsung recently said that they are hoping to ship more than 270 million units this year, which would be up on 2021 shipments. The Company has benefited because their smartphones manufacturing operations are mainly based in South Korea and Vietnam.
Google, which recently unveiled its new Pixel 6A and hinted it will launch its flagship Pixel 7 series in autumn, has told suppliers it plans to manufacture more than 10 million units this year, more than double its shipments in 2021.
In the first three months of this year, Xiaomi, though still No. 3 in the world, saw its shipments plunge 18% on the year. Oppo and Vivo shipments declined 27% and 28%, respectively, year-on-year. In China Xiaomi dropped from third to fifth in the quarter.
Top China chipmaker Semiconductor Manufacturing International has warned global shipments of smartphones will drop by some 200 million units this year due to the COVID lockdowns and the Ukraine war.
Apple had already reduced orders for its budget iPhone SE by 2 million units and lowered them by another couple of million after lockdowns in and around Shanghai.
Its key MacBook, iPhone and iPad assemblers in China are only gradually resuming production.
“If we say the war, inflation and lockdowns in China are the biggest three factors affecting the smartphone industry this year, then Samsung only has two factors compared with the other players,” said an executive at a supplier to Samsung, and Xiaomi according to Nikki Asia.
“It gives an edge to Samsung compared with those that relied heavily on the Chinese market — but there are still two knives in its back, so there are still uncertainties to Samsung’s smartphone sales this year,” the source added, referring to inflation and the war.
Jeff Pu, a veteran analyst with Haitong International Securities, told Nikkei Asia that his agency has trimmed its outlook for the global smartphone market from flat to down 1% this month to reflect the macro uncertainties and impacts of China’s lockdown.
“Most of the slowdowns are really coming from China now, while the demand still looks OK for, U.S., Western Europe, Latin America and Southeast Asia that takes in such as Australia.