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Smartphone price wars loom in China

News, 11 May 2015

BEIJING: A slowing market coupled with new entrants means that a smartphone price war is imminent in China, a leading analyst has said.

Antonio Wang, an analyst from market intelligence firm International Data Corporation (IDC), told China Daily the market is set to slow in the second half of the year. At the same time existing manufacturers are launching new models and businesses from other industries are seeking to gain a foothold.

The latest newcomers, Want China Times reported, are Qihoo 360 Technology, an internet security company, and Coolpad Group, a telecom equipment maker based in Shenzhen, who have teamed up to launch a smartphone under the name QiCool.

Before them, Gree Electric Appliances, a maker of air conditioners, introduced its own brand of smartphone, while entertainment company LeTV launched three Le Superphone models at prices up to 30% lower than rivals with the same high-end specifications.

Others have pitched their offerings at the opposite end of the market, with internet giant Alibaba linking up with China Telecom Group last month to release a low-cost smartphone aimed at users in rural areas and smaller cities for online shopping.

"There have been more than 200 brands on sale in China's market," said Wang. "Apart from a number of well-known brands by Chinese buyers, some of the other brands are selling in a certain area and offer lower prices than before."

IDC expects sales volumes to hit 450 million units this year, as the update cycle for smartphones shortens to 1.8 years, less in top tier cities. And as the market reaches saturation point, marketers are having to become ever more inventive in persuading customers to purchase new phones.

Wang also suggested that while new manufacturers and investors are looking to enter the market, the number of brands is slowly decreasing.

Newcomers are using internet marketing to capture consumers' attention and the manufacturing costs have been optimised, he said. As a result most of the major players were reconsidering the competitiveness of making and selling phones.

Data sourced from China Daily, Want China Times; additional content by Warc staff