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This is why the smartphone industry is being transferred to Asia

Up until 4 or 5 years ago, the latest flagship of major smartphone manufacturers was probably one

of the biggest news of the year for tech enthusiasts and the average Joe alike. In addition, the

premium companies that made those miraculous handsets were limited to an elite of three or four

global dominators that just couldn’t stop surprising us with every new model.

Then, saturation struck in key smartphone markets worldwide and we pretty much haven’t seen any

new releases that set the world ablaze after that. The numbers speak for themselves: Kantar

Worldpanel, a self-acclaimed global expert in shoppers’ behaviour, reported back in February that

the two-digit growth for that market is long gone. The surprising part is that emerging economies

are not only growing in that industry, but they also appear to be transferring the entire industry to

their territory. And by emerging economies we can mean no other countries that China and India,

which when combined, make up half of the world or 80% of the Asia Pacific territory.

Now that we’ve successfully made an observation, we can’t help but attempt to explain why that

may be. So with no further ado, here is why the entire smartphone industry is seemingly being

transferred to Asia.

The Western Market is highly saturated

Yeah, we said that already. But what does it mean exactly for a market to be saturated? Basically, it

means that the majority of consumers is about fed up with the certain product, thus they’re not

looking to buy more of it any time soon. That leads to the upgrade cycle of a smartphone in the US

to have risen up to nearly 28 months, while the second-hand smartphones market is rising on a

quarterly basis.

Users are not so easily impressed by newer models, since there is severe lack of innovation and

improvement in terms of specs or features.

Combine that with the economic crisis that has had a major impact mostly in the geopolitical West

world and it’s starting to get a tad clearer why the smartphone market is not going to see any

skyrockets from now on.

Asian smartphone brands have become more appealing

So, we’ve established that consumers are not as thrilled about smartphones any more and they’re

not willing to spend a high price even for a premium device. Consequently, they’re starting to steer

their attention to more value-for-money alternatives. And admittedly, Chinese manufacturers are

hard to beat on that.

Even when Apple, Samsung, Sony and LG where the only big players on the table, the phones

themselves were still being manufactured abroad, by companies based in China, India, Japan or

Taiwan.

The same companies decided over the years to keep making smartphone parts, but use them for

their own products, instead of assembling them for their European and American rivals. Hence, a

horde of Chinese and Indian brands were set up in a matter of 3-4 years right about when online

shopping started rising to unprecedented heights. That’s how tech giants like Xiaomi, Huawei,

OnePlus and Honor managed to break the marketing barrier and become world renowned.

For the record, e-commerce accounts for approximately 45% of purchases in Germany, the biggest

economy in Europe. And it’s much easier for a Chinese brand to sell its phones online than going for

a brick-and-mortar retail store at the other side of the world.

Emerging economies are now ready to sell to their own

consumers

While we were having fun with Siri’s answers to our ‘tell me a joke request, the vast majority of

people in India didn’t even have a 3G network in most of their towns. At the same time, a

considerable portion of Chinese citizens did not have access to the internet; not even their own

version which is mostly based on the Weibo search engine.

All that changed when enough Asian smartphone companies took over a fair share of the market

and they reached out to customers bringing a new product to their attention. Needless to say that

the device in question has penetrated our lives so much that it’s nearly impossible to live without it;

same thing happened to those emerging economies. Smartphone penetration skyrocketing and has

been rising ever since 2015.

To recap, EU and US smartphone markets are saturated due to lack of innovation and economic

crisis. Asia-based manufacturers seized the opportunity to offer value-for-money alternatives due to

their ability to produce handsets at lower costs. In addition, the smartphone was recently introduced

to the majority of the consumers in Asia, creating a penetration trend that experts estimate could

keep rising until 2022.

Is that shift of country domination in the smartphone industry a good thing for our own economies?

Could we benefit from that in any way? What is the industry’s future after all? Think about all those

things, the next time you’ll want to buy a random smartphone.

Sources:

https://www.androidauthority.com/where-smartphones-are-made-70798

https://www.scmp.com/business/companies/article/1947338/companies-make-tiny-components-

your-smartphone-face-trying-times

https://www.kantarworldpanel.com/global/News/Double-Digit-Smartphone-Market-Growth-is-over

https://www.cnet.com/news/smartphone-markets-glory-days-are-over-says-analyst/

https://www.mobileeurope.co.uk/press-wire/europe-increasingly-exhausted-by-smartphones-as-

market-reaches-saturation

https://traffichabits.com/how-promising-is-the-mobile-games-market-in-southeast-asia-

ab49bbcef2cf

https://www2.deloitte.com/content/dam/Deloitte/sg/Documents/technology-media-

telecommunications/sea-tmt-2017-global-mobile-consumer-survey-sea-edition.pdf

Published : Oct 3 2018
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