August 3, 2021

Three out of four mobiles are already manufactured in China | Technology



China has become the global epicenter of smartphones. Three out of four mobiles in the world are already manufactured there, according to the report The future of devices posted this tuesday under the ESC by GSMA Intelligence (the research division of the GSMA, the association of telecommunications operators). In addition, the Asian country increasingly has a greater number of consumers: around 30% of smartphones globally they are sold in their market.

Tim Hatt, head of research at GSMA Intelligence, says that “China has accumulated a huge level of influence in the world of consumer devices, even compared to its large population, which accounts for 20% of the world total.” The manufacturers of this country, he says, have benefited from a growing participation of external companies such as Apple who choose locate part or all of your supply chain in China to take advantage of economies of scale.

“We expect this trend to accelerate with 5G devices taking into account the next reduction in the costs of different components of the smartphones. This will put more competitive pressure on factories in the United States, different parts of Europe and even India, ”he says.

Until now, the strategy of Chinese manufacturers in the European and American markets has been to bet on low prices for their terminals. But this trend, according to the report, is changing. Technology giants like Huawei and Xiaomi are now looking to compete with other companies such as Apple or Samsung and lead the 5G race not only looking at the price. Its tactic involves providing better performance to its terminals.

The investigation data of the report comes from a global survey of more than 38,000 users from 36 countries and secondary analysis of data from different companies. According to it, sales of smartphones They have fallen in the last two years due to market saturation, lack of innovation and low user revenues.

Technology giants like Huawei and Xiaomi are now looking to compete with other companies such as Apple or Samsung and lead the 5G race not only looking at the price

But, according to GSMA Intelligence, with the arrival of 5G there is hope that there will be a revitalization of the sector. Users from China, South Korea and different countries in the Middle East are very likely to bet on smartphones Compatible with this technology. In fact, almost 50% of Chinese consumers say they will get a 5G phone as soon as it is available. Another 20% acknowledge that they will also buy a smartphone of this type, but he doesn’t know when he will. Taking into account the population of China, this means that the Asian country would surpass any other country in the first years of adoption of this technology.

On the contrary, in the United States, Europe and Australia, users are not so clear that they need such a mobile. In Spain only three out of 10 people They claim to have an intention to buy a terminal with these characteristics.

Why are users in China or South Korea more interested in buying a 5G compatible phone than Europeans or Americans? The report blames this interest among the Chinese population on mobile marketing campaigns and the political will that the country be seen as the world leader of 5G.

For Hatt, there are also other reasons. Both China and South Korea have users who know the technology well and operators committed to extending 5G network coverage to highly populated cities in the first two years of service. “In addition, in China mobile prices are declining faster than initially expected, which should increase adoption among marginal consumers – those who want 5G but not pay a high price for it -” he adds.

The majority of respondents consider that the main advantage of 5G is greater speed. They also expect better coverage, improvements in new services and to connect new devices. While half would pay to have faster speeds, only 15% would do it for new services.

The rise of Huawei and the Asian market

For the GSMA, the biggest change in the smartphone sector in the last 12 months It has been the rise of Huawei. While Apple and Samsung account for more than half of the smartphones in circulation (55%), Huawei has now expanded beyond China to significant positions in Europe despite the veto he has suffered in recent months by the United States.

This trend could continue if the Chinese manufacturer chooses to adopt an aggressive strategy regarding pricing of 5G compatible devices, according to Hatt: “In the case that Chinese consumers reach 5G faster than other early adoption markets , competitive prices would be an important factor that would favor domestic manufacturers such as Huawei and Xiaomi while pressing the margins of external competitors. “

Apart from 5G, the report predicts a change in content generation and device manufacturing, which will be more focused on Asian users. Of the top 10 growth markets of smartphones In the next five years, seven are in Asia. China and India are the largest, by virtue of the size of their population, but countries like Indonesia and Vietnam will also have a large number of people who access the Internet through their phones.

Hatt explains that most of these users do not speak English, are young, are attracted to the local culture and do not have a PC. “In this sense, Netflix and its intention to dominate the world should not be taken for granted. There are a number of local producers in India, Indonesia and sub-Saharan Africa that take advantage of this local demand. MTN and Turkcell are good examples, ”explains the researcher.

Smart home

Not everything are smartphones. China has the highest proportion of devices connected in the home, followed from far away from the United States and Europe. The report divides the smart home into three categories: smart speakers, media and entertainment and other devices such as appliances.

Despite recent controversies over listening programs from companies like Amazon or Google, the sale of smart speakers does not stop increasing. While in 2017 only 3% of Spanish households had such devices, in 2018 the percentage increased to 5% and in 2019, to 13%. Adoption is markedly higher in the US (27%) and China (33%). The report blames the growth of falling prices and the simplicity of use cases.

However, most consumers still use speakers for basic functions such as listening to music or setting reminders. The lack of utility, followed by the cost and concern for privacy, is the main reason why users do not acquire a smart speaker. In fact, there are still very few customers who use them for other options such as controlling home devices or making purchases online. This reflects, according to the report, the need for third parties to develop more complex functions for the speakers.

In the entertainment category, smart TVs stand out. In China, 58% of households have a smart TV, a remarkably high figure compared to 35% in the United States and 29% in Europe. Other devices such as connected bulbs or burglar alarms have a lower adoption – below 20% – both in homes in China, the US and Europe.

One in four adults has a smart watch

The adoption levels of smart watches and physical activity trackers They have grown significantly in the last 18 months. 25% of adults currently have such a device. The rise of these devices, especially among millennials, It has led technology giants to acquire third-party features. In 2019 Google bought Fitbit smart watches to stand up to the Apple Watch. In addition, both the Mountain View company and Amazon and Apple have an interest in health information to nurture your analysis tools and improve devices. The researchers argue that such smart watches and trackers, in combination with remote consultations, have the potential to reduce visits in person to medical centers or hospitals.

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