Chinese smartphone vendors meld tech savvy with low prices to win home market

Both Lenovo and Xiaomi are outselling Samsung in the Chinese smartphone market

Since then, Lenovo's handset business has taken off, and it offers dozens of models on the market. The company now ranks second in China's smartphone space, behind Samsung, according to research firm Canalys. In the second quarter, it shipped 10.8 million phones to the country's market. The high demand has made Lenovo the world's third largest smartphone vendor, despite primarily selling its handsets only in China. Pictured is Lenovo's K900, an Intel-powered handset, with a metal casing and a 5.5-inch screen that's priced at 3299 yuan ($537).

Since then, Lenovo's handset business has taken off, and it offers dozens of models on the market. The company now ranks second in China's smartphone space, behind Samsung, according to research firm Canalys. In the second quarter, it shipped 10.8 million phones to the country's market. The high demand has made ...

In China's booming smartphone market, it are not foreign companies but domestic brands such as Lenovo and Xiaomi that are dominating, according to analysts

In this year's second quarter, Chinese PC maker Lenovo was top dog in the country's smartphone market, with a 12.5 percent share, according to research firm IDC. This put it only slightly ahead of fledgling smartphone maker Xiaomi, which had a 12.4 per cent share.

Earlier this month, research firm Canalys provided a different estimate, and said Xiaomi was already China's top smartphone seller in the quarter.

The rise of the two local brands is notable, considering that South Korean maker Samsung, and years before it, Nokia, consistently ranked as China's top selling handset makers. But in this year's second quarter, Samsung's market share dropped to 9.8 percent, down from an 18.5 percent share it held a year ago, according to IDC.

Samsung's share was so low during the period, that it ranked fifth, behind the Chinese smartphone brand Coolpad and Huawei Technologies. Apple, while still popular in China, has become more of a niche smartphone dealer, selling its iPhones at a high price-tag.

To some degree, it was only a matter of time before China's own smartphone vendors would lead the market, said IDC analyst Kitty Fok on Tuesday. Domestic companies have been especially aggressive in offering phones at low prices, and building devices with features that appeal to local consumers, such as dual SIM card slots, and handsets with larger screen sizes, she said.

In terms of technology too, China's smartphone companies have also caught up with their foreign rivals, and are offering their own cutting-edge devices, with the help of Qualcomm, Nvidia and Intel."For a lot of local Chinese, there's a lot more variety in the smartphone market now with local brands. So why buy a multinational brand?" she said.

Leading China's smartphone market are two local companies that have only begun selling phones outside of the home market. In the case of Lenovo, the company has long led the market as its biggest PC vendor, and its brand is a household name in China. In recent years, it has made smartphones a company focus, and is offering a wide range of handsets, from low to high-end, and using its huge network of retailers to sell them across the country.

Xiaomi, on the other hand, has been selling phones with exceptionally low prices to a young generation of consumers. That helped the company rapidly expand its market share, from a year ago when the company wasn't even a top five smartphone vendor in China.

Samsung will still have a chance to lead China's smartphone market again, Fok said. The company's market share fell partly because it was clearing product inventory, and also because it lacked new phones with 4G connectivity, and saw increased competition from Chinese vendors on bigger screen devices, she added.

In the past, Samsung has been quick to localize its phones for the Chinese market. For instance, it was the first foreign brand in China to launch a phone with slots for two SIM cards, according to Fok.

But even if Samsung reclaimed the number one spot, the company's Chinese rivals would not be far behind, she said. "For Samsung to come back to the leading position, it won't just be about the product, but changing the perception on why Chinese users need to buy a foreign phone," Fok added.

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