Samsung leads Apple in China

15 March 2012

BEIJING: Samsung is the clear leader in China's burgeoning smartphone sector, posing a major challenge for Apple.

Gartner, the research firm, reported that Samsung held 24.3% of China's smartphone segment at the end of 2011, measured against the 7.5% recorded by Apple's iPhone.

Samsung has taken a diversified approach in the country since 3G services were rolled out in 2009, partnering with all three official network providers: China Mobile, China Telecom and China Unicom.

Juha Park, Samsung's SVP for product strategy, told Bloomberg that the company's business model in China was actually "the same" as in most other geographies.

"We make product innovation and make our brand very desired in the market," said Park. "That's what we do to become a major player. We have been doing quite strong growth in the China market."

According to Gartner's projections, smartphone shipments should rise by 52% in China in 2012, hitting 137m units, meaning the country might surpasses the US as the category's largest outlet.

Up until March 2012, China Unicom was the sole official provider of the iPhone, but although Apple has now signed a distribution deal with China Telecom, both of its allies lag substantially behind China Mobile's total of 655m subscribers.

"I don't expect Apple to replace Samsung any time soon," Sandy Shen, a Gartner analyst, told Bloomberg. "China Telecom is the nation's smallest carrier, so the extent to which they can help Apple is quite limited."

Nokia, Huawei and ZTE also held a greater market share than Apple, and observers suggest that dramatically increasing iPhone sales at their expense would be difficult without a change in strategy.

"Having access to more subscribers gives vendors like Samsung an advantage," Teck Zhung Wong, an analyst at IDC China, the insights provider, said. "If Apple is going to continue to grow in the Chinese market, it has to consider very seriously a handset with China Mobile."

Apple's plan to launch the iPhone 4 in China earlier this year was hamstrung after the police ordered one of its retail stores to be temporarily closed due to the scrum among eager consumers, although this did prove that shopper interest is strong.

Carolyn Wu, from Apple's media team in Hong Kong, argued the iPhone 4S had been "an incredible hit" worldwide. "[We] can't wait to get it into the hands of even more customers in China," she said.

Data sourced from Bloomberg; additional content by Warc staff