[Author: Stefano Di Filippo]

Over the span of several decades, the remarkable expansion of China’s economy and the growth of its middle class have significantly transformed the country’s role in various industries. Notably, China has experienced a rapid surge in its domestic smartphone market. However, in 2014, Lenovo Group Ltd., the third-largest global smartphone maker, headquartered in Beijing, stated that the era marked by such extraordinary growth was coming to an end. While transitioning into a slower phase, China had already assumed a key role in the industry. Chinese mobile phone manufacturers including Xiaomi, Lenovo, and Huawei, accounted for more shipments in the global smartphone market than Samsung and Apple combined.

The Chinese smartphone industry’s growth was driven by its ability to cater to users across all economic spectrums. Unlike Apple and Samsung, certain Chinese companies have concentrated on providing mid-range, cost-effective products while maintaining features comparable to more expensive phones. Additionally, these manufacturers benefit from a vast domestic consumer base. Nevertheless, the high-end segment of China’s smartphone market remains dominated by Apple, as the iPhone is considered a status symbol by many young Chinese people. However, the increasing dominance of the iPhone has raised concerns, leading several Chinese agencies and state-owned enterprises to prohibit the use of Apple phones by their employees, aligning with a practice already adopted by central government bodies.

Apple’s rise in China, which this year overtook the U.S. as the world’s largest iPhone market, was also propelled by export restrictions imposed three years ago by Washington on Semiconductor Manufacturing International Corporation (SMIC), China’s primary chipmaker. These restrictions aimed at mitigating risks associated with the military application of chip technology.

Telecom giant Huawei’s consistent decline in its smartphone sales in China is partially due to the sanctions that severed its access to advanced chips and equipment from the US. Recently, in an attempt to win back customers lost to Apple, the company unveiled its latest flagship phone: the Mate 60 Pro. The features of this device have ignited debates among industry experts. Notably, the device is equipped with sophisticated 7nm chips designed and produced domestically, hinting at a breakthrough in China’s semiconductor industry. This suggests that the Mate 60 Pro might mark the inception of a new phase in China’s smartphone market, with potentially very profound business and political implications.

Categories: Business Post