Mobile phone manufacturers may struggle to do business in China this year because the nation's smartphone market will become highly saturated, analysts from research firm Gartner Inc warned.
C.K. Lu, a principal analyst with Gartner who follows the consumer electronics industry, said China witnessed strong smartphone growth in recent years. Smartphone sales to end users exceeded 82 percent of the total mobile device sales in the third quarter of 2013.
Lu expects the smartphone penetration rate may even reach 90 percent this year. "The Chinese smartphone market is getting saturated. That means mobile phone companies are finding it hard to maintain steady growth in China starting in 2014," he pointed out.
Lu made the remarks during a news briefing in Beijing on Tuesday.
Gartner forecasts that almost 443.5 million mobile phones will be sold in China in 2014, with the total number of mobile phones in use reaching more than 1.075 billion.
The country is expected to sell 395 million smartphones this year, accounting for 31.5 percent of the world's total smartphone sales.
But the tougher competition environment will not usher in a bloody reshuffle in the Chinese smartphone market. "Various mobile phone companies will find ways to survive because they are really resilient," Lu said.
According to a survey of middle-class buyers in China, brand and customer care are the top two IT purchasing factors. Even for low-end devices, quality and design are equally important.
"The survey confirms that Chinese customers do not want just low-cost or inexpensive products, but a product that offers value for money, brand strength and good customer care," Lu said.
"Vendors can no longer treat China as one of the emerging markets in which a focus on low price is enough to grow market share," he added.
The premium phone segment is expected to enjoy the highest growth in China over the next five years. In 2014, premium phones are expected to comprise 20 percent of sales, growing to almost 32 percent in 2017, Gartner said.
Shenzhen-based TCL Corp rose unexpectedly in the global smartphone market last year, according to Gartner. TCL nearly doubled its smartphone shipments every quarter in 2013.
Its smartphone shipments were about 16 million worldwide last year, Gartner said.
"Strong demand of carriers in emerging markets will allow the company to be one of the fastest-growing smartphone companies in 2014," Lu said. He estimated that TCL might even enter the first tier, narrowing the gap with Samsung Electronics Co Ltd and Lenovo Group Ltd in the domestic market this year.
Lenovo and another company, Coolpad, may face strong challenges in the mobile phone business in 2014, Lu said.
"Because their overseas expansion is limited, in the domestic market they have to use price advantages and sacrifice profits to gain a bigger share," Lu said.
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