Frustrated ZTE
In recent years, the presence of ZTE mobile phones in China’s domestic market has been very low. According to data from CINNO Research, ZTE’s market share in China was 1.6% in the first half of 2020. Although it has increased from the first half of 2019, in horizontal comparison, this market share is only slightly higher than Samsung’s 1.2%.
The smartphone market is undergoing a new round of reshuffle. The wave of 5G replacements has swept the world, especially in the Chinese market where 5G commercial applications are accelerating. In October, 5G mobile phone sales accounted for 64.1%. Faced with unprecedented changes, the world’s major smartphone brands are making full efforts to increase investment in order to win more market share.
In the complex situation, Xiaomi has benefited the most, while Huawei is under the most pressure, while Samsung and Apple are relatively stable. The reordering among the top giants has also made some ambitious mobile phone brands more eager to try, including the once glorious ZTE Mobile Phone.
Why ZTE Mobile Phone lost the market?
Samsung’s mobile phones are marginalized in the Chinese market, it can be said that it is self-inflicted, while the reason why ZTE has fallen to this point is more complicated. But in general, on the one hand, there are ZTE’s own reasons, and on the other hand, it is also affected by the external environment.
From the internal cause, the main reason is the lack of Internet thinking. The slow response to online changes in supply chain construction and brand promotion is the fundamental reason for ZTE’s continuous decline in competitiveness in the domestic market in the past few years. When the “China Cool Alliance” faced disintegration, only Huawei among the four giants quickly adapted to market changes and made every effort to move closer to the Internet thinking. The other three, including ZTE, reacted very slow.
From the perspective of external factors, the objective impact of the “ZTE Incident” cannot be ignored. If the lack of Internet thinking makes ZTE mobile phones not run fast enough, the “ZTE Incident” that has lasted for several years is like kicking it hard. In 2016, ZTE suffered from export restrictions and suffered a net loss of 2.36 billion yuan that year. In the following two years, it was repeatedly harassed. Not only did it pay 1.19 billion US dollars in fines, from losses in international trade business to personnel changes at the executive level, but the blow to ZTE is also even harder to quantify.
Starting from the first year of 5G commercial use in 2019, the entire ZTE Group has finally returned to the right track after overcoming a series of internal and external troubles. The development of the ZTE Mobile Phone business has also been revitalized.
Benefits of 5G shifting to ZTE Mobile Phone
With the continuous acceleration of 5G commercialization in the Chinese market, since 2019, the market environment for ZTE mobile phones has greatly improved, and many hard-won opportunities have emerged.
First of all, the accelerated commercialization of 5G itself is a huge benefit to ZTE mobile phones. On the one hand, compared with other smartphone manufacturers, ZTE mobile phones are seriously absent from the 4G era. Therefore, the rapid arrival of the 5G replacement tide can undoubtedly help it save a lot of time for making up and directly realize the skipping level; On the other hand, ZTE, like Huawei, is the world leader in communications technology. Whether it is from a large number of 5G-related patented technologies it has mastered, or from the perspective of its status in the domestic communications industry, ZTE mobile phones can have more initiative.
Secondly, the mobile phone industry has reshuffled again, giving ZTE more opportunities to take advantage of. Undoubtedly, the biggest change in the current domestic smartphone industry is that Huawei is forced to give up more market share while Xiaomi is struggling to fight and get a sudden increase in market share. Of course, the impact of the recent public opinion crisis of Xiaomi’s “Diaosi”(Diaos is the underprivileged youth who could only rely on their own talents and hard work for a shabby existence) remains to be investigated. In such dazzling changes, the chances of the ZTE mobile phone’s rise are undoubtedly greatly improved. After all, ZTE, which is similar to Huawei, has a certain substitute for Huawei.
Furthermore, the close cooperation between ZTE and telecom operators can once again play a huge role in the 5G era. The glorious period of the “China Cool Alliance” is now drifting away. However, the advent of the 5G era has allowed telecom operators to pick up their channels, and ZTE, which maintains close cooperation with telecom operators, has the opportunity to gain a new channel advantage.
Opportunities came back
In the face of new opportunities that continue to emerge, ZTE Mobile has been stepping up its deployment in recent years in an attempt to fully return to the Chinese market. At present, these actions of ZTE mobile phones have achieved very good results. After careful study, it is not difficult to find that in a series of measures, the positive actions at the three levels of brand, channel, and strategy are constantly opening up more and more living space for ZTE mobile phones.
In terms of brands, ZTE mobile phones adopt aggressive strategies to lead the trend. The three mobile phone brands ZTE, Nubia, and RedMagic have faded out of mainstream consumers’ vision. If they want to regain their reputation in the domestic market in the short term, ZTE mobile phones will inevitably have to resort to some newfangled and dangerous moves. In fact, ZTE mobile phones did indeed do the same. From the launch of the first domestic 5G mobile phone in 2019 to the release of the world’s first under-screen camera phone in 2020, ZTE mobile phones were unwilling to be outdated in leading the trend and tried their best to compete for the first place.
In terms of channels, ZTE has launched an ambitious channel expansion. ZTE recently announced that its terminal business will fully return to the 2C market in China in 2021, through multi-channel cooperation such as national generation, provincial generation, and direct supply, to launch operators and open market operations. It will invest in the construction of 5,000 retail locations throughout the year and establish an offline retail system.
In terms of development strategy, apart from returning to the Chinese market, ZTE has made every effort to build a “1+2+N” smart terminal product layout. Although such an IoT layout is not special among the giants, it is clear that in the future, under the synergy of rich product ecology, the development of ZTE mobile phones will have more lasting vitality.
ZTE has passed the most difficult period, but in the consumer market, the time and opportunities that ZTE has missed by mobile phones are hard to recover. However, at the moment of starting again, in determination and action, it has gone all out.
China Smartphone Quarterly Market Data (2019Q1 – 2020Q3)
| China Smartphone Shipments Market Share (%) | ||||||
| Brands | 2019 Q2 | 2019 Q3 | 2019 Q4 | 2020 Q1 | 2020 Q2 | 2020 Q3 |
| Huawei# | 35% | 40% | 35% | 41% | 46% | 43% |
| Vivo | 18% | 19% | 17% | 17% | 16% | 18% |
| Oppo | 19% | 18% | 16% | 15% | 16% | 16% |
| Xiaomi | 11% | 8% | 9% | 11% | 10% | 13% |
| Apple | 6% | 8% | 14% | 9% | 8% | 8% |
| Realme | 0% | 1% | 1% | 0% | 0% | 0% |
| Others | 11% | 6% | 8% | 7% | 4% | 2% |
*Ranking is according to the latest quarter. Source: Counterpoint
#Huawei includes HONOR
Is there a good chance to ZTE Mobile Phone?
Determination and action can change oneself, but cannot directly determine the result. China’s smartphone market is highly concentrated and there are many strong players. Although ZTE’s mobile phone is going all out to reverse the situation, it is destined to be full of challenges on the way back to the Chinese market.
From the perspective of the market environment, ZTE mobile phones must deal with increasingly fierce market competition. Intensified competition in the domestic smartphone market will become an inevitable trend. Even if Huawei surrendered a lot of market share when it was trapped, it could not reverse this trend. Although the 5G replacement wave has already begun, this wave of replacement has not been able to completely reverse the decline in market demand.
The size of China’s smartphone market has been shrinking for several years, and the outbreak this year has made the situation worse. According to the latest report from Counterpoint, the shipment volume of China’s smartphone market in the third quarter further shrank, falling by 14% compared with the same period last year. In the overall market that continues to decline, Mi OV can firmly control the low- and mid-range market, while the high-end market has too high a threshold, and obviously not much room for ZTE mobile phones.
From the perspective of ZTE’s mobile phone itself, because of the lack of significant trump cards, it is not realistic to rapidly rise in the short term. For example, there is a significant gap between ZTE mobile phones and giants such as “Huami OV” in terms of brand influence, so although ZTE mobile phones have achieved the industry’s first place in terms of “5G mobile phone release” and “under-screen camera phone release”, However, most consumers have a low level of awareness and recognition of this, and the mainstream market does not pay attention to it.
All in all, although the current opportunities in the smartphone market are very rare and ZTE mobile phones are also actively making progress, ZTE mobile phones still need to face more challenges if they want to rise again in the melee.
