Yonhap news reported that Samsung is struggling in its Chinese market despite of showing record-breaking unit sales of Samsung smart phones in China. Analytics marked Samsung’s Q2 2013 sales number at 15.3 million, whereas Canalys marked them at 15.5 million. Although reports claim these optimistic figures, Samsung’s sale has not translated into robust amount of revenue.
In the first half of this year Samsung’s net sales stood at KRW 77.2 trillion ($69.4 billion) out of which, China accounted for KRW12.6 trillion ($11.3 billion) or a 16.4 percent share rather than 20.4 percent share recorded in the Korean company’s annual sale last year.The U.S is at KRW20.6 trillion ($18.6 billion) to make up a 26.7 percent share of Samsung’s turnover in the first half of this year, and further Asia and Africa to follow at 23.3 percent and Europe at 21.5 percent.
However, this seems to be a tough task for the smart phone companies in China, that the price point of a smartphone seems to be where war is being waged right now. Comparatively Apple has seen a sharp decline in its revenue for the Greater China region in its Q3 financial results released last month as claims to be down by 43 percent and 14 percent year over year. Premium prices and lack of recent device launch has instigated consumers to opt for Android Smart phones.
Seeing the results Samsung seems to be perfoeming amazingly well, given that the analyst firms have consistently ranked Samsung as top on the charts. Although all these seems to be a great time for Samsung, the revenue gap between Samsung and Apple seems to be pretty narrow. Reportedly, Apple has made $4.65 billion in China in its third quarter alone, while Samsung made $11.3 billion in the first half of the year.
This is what went wrong with Samsung; Lower the price of your phones, hard work for the revenue. Apple’s iPhone are highly priced, although the company has to make no extra effort to earn the revenue. Despite of having record breaking sales, its proves, that it’s not contributed to the revenue. Xiaomi which is a visible reminder to smart phone retailers in China that, mid-range devices can also be “Premium”, just because the company subsidizes each phone sold and has thus been depressing prices in the Chinese smart phone market.
The CEO of this firm Lei Jun claims that Xiaomi’s core business strategy does not depend on the sales of its smart phones, rather it depends on 3-core business competencies : e-commerce ,website and sale of Internet Sevices.However, Samsung seems to be in a difficult position , because like any other samrtphone company which vies for the attention of a pool of limited customers, Samsung has a huge pile of work to be done as it has easily dominated the Chinese market.
Apple’s iPhone is more well-off treated as a status symbol by its customers. Other companies are also targeting the same range of smartphones where Samsung once ruled.
Chinese companies like Lenovo, Yulong, ZTE, and Huawei are giving a tough competition to Samsung by launching similar smart phones to Samsung in similar range. Among the China’s low-imco,e consumers Samsung still has room to expand its presence. It just needs to set up the efforts at a faster pace and plan things accordingly, as so many companies are following closely behind its heel, ready to trip it over anytime.