zijin_cheng
Active Member
I just created a video about why Chinese smartphones are so cheap, I thought this would be discussion promoting. Let me know if I missed anything important in the video or got anything wrong!
The real reason why Chinese phones so cheap...
- Starter*in zijin_cheng
- Datum Start
I just created a video about why Chinese smartphones are so cheap, I thought this would be discussion promoting. Let me know if I missed anything important in the video or got anything wrong!
Joe_User
Well-Known Member
What's about status symbol?
If you use UMI, Elephone and even Xiaomi, peoples reactions are "You use what?" and in the mind "Oh, this pure guy can't buy anything worthy..."
The margin of Apple products ist like fashion or premium cars, because if you use it, you automatically are in the middle of interests.
If you use UMI, Elephone and even Xiaomi, peoples reactions are "You use what?" and in the mind "Oh, this pure guy can't buy anything worthy..."
The margin of Apple products ist like fashion or premium cars, because if you use it, you automatically are in the middle of interests.
MaskedGaijin
Active Member
Interesting! And now i know how to pronounce Shenzhen correctly!
ender24
Well-Known Member
lol, this is why we rather should focus on changing the mindset of youngsters, but alas, that's fighting against windmills.
I would have thought, a world, where teenagers look at each other's gadgets and think " hahah, wow daddy or mommy bought you that iPhone, or how does an average 15yr old is in a position to afford that?" is preferable over "wow, you must be a great person, because you have such an expensive smartphone" .
but shallowness is not just reserved for young people, but all human beings
in reality, I actually don't mind that kind of shoppers. I mean, there has to be people, who are either rich or dumb enough, to pay so much for (necessary and unnecessary) toys, so that there are huge margins that can be used for furthering the development of technology.
I will just be happy to buy and use 3 years old technology, and then and there , look at my growing bank account savings and my 404k saving plans, and think that when I am old, and in retirement, I won't hopefully need social welfare support, to live.
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ender24
Well-Known Member
yup, serves me right, sneaking at working hours to delve into such discussions online!
Actually you don't give a real answer why Chinese phones are cheaper. With every point you remain on the surface and don't go into detail. I feel the video is more semi advertorial for mentioning a certain shanzhai brand.
1. Does not making money on a smartphone has anything to do with being cheaper? From the top 4 of Chinese manufacturers only Xiaomi admitted they make phones around cost price and their margin is low. As mentioned correctly this is because they want people to use their eco system and create a hype around the brand name. Last year in Shenzhen, smartphones part prices increased more than the rate crypto currency so it is doubtful if Xiaomi can sustain this tactic much longer. The top 3 Huawei, Oppo and Vivo do make a profit on their smartphones and they are anything but cheap.
2. Keeping no inventory reduce company costs but does not necessarily means it makes phones cheaper. What makes them cheaper is how much margin you are willing to take. For $15.000 you can go to any OEM factory in China and they produce the phone you want in small batches. The shanzhai brands that operate international are in fact no manufactures but small marketing companies. They live of flash sales and introduce a new model every 3 months where the cycle repeats itself.
3. Again does this make smartphones cheaper? Huawei/Honor, Vivo/Oppo, Xiaomi, ZTE and Meizu do spend marketing money but don't burn it like Samsung or Apple. They mainly promote on their home market China, Taiwan, Hong Kong and SE Asia. Huawei and ZTE also do promotion in Europe and North America. All the shanzhai brands promote their phones through ecommerce companies with review models and flash sales. Furthermore they use foreign social media to promote their products. At start OnePlus used the same marketing tactics as Xiaomi and also used an invitation system creating a hype around the brand because they are cheap to use.
4. Not having patents only gives issues if you want to operate in Europe and North America were there are patent laws and fines. Most known case was Xiaomi. They didn't have any patents so they could not go international and started first in BRIC countries and SE Asia where patents are also not well protected. By acquiring Leadcore and patents from Microsoft, Xiaomi meanwhile build up a patent portfolio. But again this has nothing to do with why Chinese smartphones are cheaper. In fact they get more expensive because royalties need to be paid to Qualcomm, Mediatek or Samsung when their technology is used. Also the top 4, ZTE, Lenovo and Meizu do have their own R&D and the ROI flows only back by increasing the prices of their products.
5. The wages in China increase by 6% to 10% a year. Labor is getting so expensive that Hon Hai is even planning to use assembly robots to reduce employee costs. Also they are looking for setting up factories in India, Indonesia and Vietnam as wages there are lower.
As to parts, I already mentioned the prices increased even more than the rise of crypto currency in 2017. These days the parts they served us from 2009 couldn't be used anymore. Parts from JDI, Sharp, Sony, Samsung or Qualcomm are getting more mandatory, meaning the phones get more expensive and not cheaper. In case of the shanzhai brands, they don't use grade A parts keeping their prices lower than Huawei, Xiaomi or Oneplus but also their prices are also on the rise.
In conclusion, Samsung but mainly Apple found out that people do not want to spend a $1000 or even 1300 Euro for a smartphone unless they are a real fanboy. True, Chinese phones are still cheaper than a Samsung Note 8 or an iPhone X because of lower manufacturing costs, lower quality parts and low company costs but this only applies to the real shanzhai brands. Huawei/Honor, BBK (Oppo, Vivo, OP) and Lenovo/Motorola produce much better quality phones but due to increased development costs, marketing and higher company costs they have to increase their prices towards Samsung and Apple.
I see Chinese smartphones as Japanese cars of the 70's. At first they were cheap rust buckets but they improved over time making them the solid cars of today and their prices are now near or even higher than prices from European or American brands. Chinese smartphones will walk that same path.
1. Does not making money on a smartphone has anything to do with being cheaper? From the top 4 of Chinese manufacturers only Xiaomi admitted they make phones around cost price and their margin is low. As mentioned correctly this is because they want people to use their eco system and create a hype around the brand name. Last year in Shenzhen, smartphones part prices increased more than the rate crypto currency so it is doubtful if Xiaomi can sustain this tactic much longer. The top 3 Huawei, Oppo and Vivo do make a profit on their smartphones and they are anything but cheap.
2. Keeping no inventory reduce company costs but does not necessarily means it makes phones cheaper. What makes them cheaper is how much margin you are willing to take. For $15.000 you can go to any OEM factory in China and they produce the phone you want in small batches. The shanzhai brands that operate international are in fact no manufactures but small marketing companies. They live of flash sales and introduce a new model every 3 months where the cycle repeats itself.
3. Again does this make smartphones cheaper? Huawei/Honor, Vivo/Oppo, Xiaomi, ZTE and Meizu do spend marketing money but don't burn it like Samsung or Apple. They mainly promote on their home market China, Taiwan, Hong Kong and SE Asia. Huawei and ZTE also do promotion in Europe and North America. All the shanzhai brands promote their phones through ecommerce companies with review models and flash sales. Furthermore they use foreign social media to promote their products. At start OnePlus used the same marketing tactics as Xiaomi and also used an invitation system creating a hype around the brand because they are cheap to use.
4. Not having patents only gives issues if you want to operate in Europe and North America were there are patent laws and fines. Most known case was Xiaomi. They didn't have any patents so they could not go international and started first in BRIC countries and SE Asia where patents are also not well protected. By acquiring Leadcore and patents from Microsoft, Xiaomi meanwhile build up a patent portfolio. But again this has nothing to do with why Chinese smartphones are cheaper. In fact they get more expensive because royalties need to be paid to Qualcomm, Mediatek or Samsung when their technology is used. Also the top 4, ZTE, Lenovo and Meizu do have their own R&D and the ROI flows only back by increasing the prices of their products.
5. The wages in China increase by 6% to 10% a year. Labor is getting so expensive that Hon Hai is even planning to use assembly robots to reduce employee costs. Also they are looking for setting up factories in India, Indonesia and Vietnam as wages there are lower.
As to parts, I already mentioned the prices increased even more than the rise of crypto currency in 2017. These days the parts they served us from 2009 couldn't be used anymore. Parts from JDI, Sharp, Sony, Samsung or Qualcomm are getting more mandatory, meaning the phones get more expensive and not cheaper. In case of the shanzhai brands, they don't use grade A parts keeping their prices lower than Huawei, Xiaomi or Oneplus but also their prices are also on the rise.
In conclusion, Samsung but mainly Apple found out that people do not want to spend a $1000 or even 1300 Euro for a smartphone unless they are a real fanboy. True, Chinese phones are still cheaper than a Samsung Note 8 or an iPhone X because of lower manufacturing costs, lower quality parts and low company costs but this only applies to the real shanzhai brands. Huawei/Honor, BBK (Oppo, Vivo, OP) and Lenovo/Motorola produce much better quality phones but due to increased development costs, marketing and higher company costs they have to increase their prices towards Samsung and Apple.
I see Chinese smartphones as Japanese cars of the 70's. At first they were cheap rust buckets but they improved over time making them the solid cars of today and their prices are now near or even higher than prices from European or American brands. Chinese smartphones will walk that same path.
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G
Gast123
Guest
-
Moderiert:
I have edited my original story a little bit to give it more context. I left out aspects like Chinese entrepreneurship and Chinese culture where there seems to be a determination to strive or fail to become rich and successful. I see this daily happening, so I know what I am talking about.
@mibome, the topic starter encouraged to comment on his video which I did. In general Chinese smartphones are cheaper and the facts in the video are true but are isolated incidents and have no real relation to the question.
@mibome, the topic starter encouraged to comment on his video which I did. In general Chinese smartphones are cheaper and the facts in the video are true but are isolated incidents and have no real relation to the question.
Erbsenmatsch
Well-Known Member
i think thats the definition of clickbait. isn't it
?@Erbsenmatsch, another definition is: Website content that is aimed at generating advertising revenue, especially at the expense of quality or accuracy, relying on sensationalist headlines to attract click-throughs. My version is the summarized version 
Well end of discussion, next topic please. Mei shi la, mei shi la (nothing to see here)
Well end of discussion, next topic please. Mei shi la, mei shi la (nothing to see here)
zijin_cheng
Active Member
I did not mention that because it depends on where you live, customs is a lot more lax in North America than Europe. I know you guys get hit with VAT 100% of the time, in North America it depends on your luck.
That is a lot less prevalent in Europe than China/North America. People in CANDA/USA either don't trust or want a status symbol, that's why its so hard for people to adopt Huawei, Xiaomi, etc
Haha you can't really call this an advert, I think its closer to being a fanboy because Xiaomi = value.
ender24
Well-Known Member
i agree with nearly everything you have said.
except for that quoted part.
I thought, well actually i am not sure, if its something particular , that only applies to the German provider market, but most teenagers and tweens, or even adults, I know, that want those high end smartphones, of course don't spend their money buying those SPs at once.
most simply sign a contract, which provides the newest model, and the catch is only that they have to pay monthly something between 30 - 45 EUR , for the allnet and mobile internet "flat"rate.
like i said, i have not a single clue, how the north american market, or other EU countries and their respective mobile phone market are working, but from the most recent studies I have read about in the magazine "connect" , Germany has one of the worst cost - mobile data volume ratio at least in EU.
Thank you @ender24.
To answer your last question first. In North America you buy or get a phone with your contract. For instance this kind of purchase plan is no longer allowed in the Netherlands because you don't actually buy a phone but you are paying off a loan.
My quote refers to sales of the Note 8 or iPX. Although not confirmed, both smartphones are not real hot sellers especially in an important market as China. Apple has, unlike in other regions, even lowered the price of the iPX in China. Currently the best deal in China is the also lower priced iPhone 8, same hardware specifications but with older iPhone design. So price wins over novelty even in a status sensitive country like China.
Youth are always influenced by others. In my school days it was about having Nike shoes or a Honda MTX. These days it are smartphones or designer clothes. But children of today are already conditioned, as child with TV ads for candy, fast food and toys. In their teens with what class mates have or popular vloggers show off on social media. Nothing new there. It are the parents that surrender to their child pressure or just don't care.
Apparently Apple is working on a iPhone X with 6,5 inch OLED display, will the price tag go towards $1.500? Probably it will. The thing is that for most people a $1.000 or 1.000 Euro price tage is still a barrier for them they don't want to cross but then again the price of the first iPhone was $599.
To answer your last question first. In North America you buy or get a phone with your contract. For instance this kind of purchase plan is no longer allowed in the Netherlands because you don't actually buy a phone but you are paying off a loan.
My quote refers to sales of the Note 8 or iPX. Although not confirmed, both smartphones are not real hot sellers especially in an important market as China. Apple has, unlike in other regions, even lowered the price of the iPX in China. Currently the best deal in China is the also lower priced iPhone 8, same hardware specifications but with older iPhone design. So price wins over novelty even in a status sensitive country like China.
Youth are always influenced by others. In my school days it was about having Nike shoes or a Honda MTX. These days it are smartphones or designer clothes. But children of today are already conditioned, as child with TV ads for candy, fast food and toys. In their teens with what class mates have or popular vloggers show off on social media. Nothing new there. It are the parents that surrender to their child pressure or just don't care.
Apparently Apple is working on a iPhone X with 6,5 inch OLED display, will the price tag go towards $1.500? Probably it will. The thing is that for most people a $1.000 or 1.000 Euro price tage is still a barrier for them they don't want to cross but then again the price of the first iPhone was $599.
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