Smartphones closures, who is the next turn?

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This is a common weekend afternoon, the largest distribution center for electronic products in shenzhen.Traders continue to use loud music to attract customers. In the mobile phone stores.It cannot have a blatant hid lonely – used to be a shop is hard to find.But now empty tank rate up to a third. Because so a few people visit, the keepers of the counter boring to brush the circle of friends.They use of the latest version of the apple, while selling the unknown provenance of mobile phone and peripheral products.

Heyday, huaqiang north has gathered more than 2000 related to mobile phone shops.Through low cost to imitate the appearance of the mainstream mobile phone product or part of the function.It produced a lot of cheap low-end phones, sold to domestic and export all over the world. Now, it is in a dismal performance reveals the fact that the golden age of domestic smartphone is over.

The more terrible is given news footnote: won a baidu hundreds of millions of investment, and claims that want to challenge the one hundred percent of millet mobile phone fade away.It Was the Internet to raise the first large coke phone broke out.Apple’s device suppliers, one of the world top three panel factory in light electric factory of nanjing – ladies yu optical production have closed; Shenzhen star enterprise, huawei, zte tier one suppliers FuChang electronic collapse. Dongguan phone contract sign letter communication, chairman of the manuscript since.

This list can also be very long.
Business smartphone merchants also somebody was obvious.Smart apparel accessories heat up in the market, huaqiang north also often appear foreigners purchase such products. So they started in the counter on the smart watches, bracelets and even unmanned aerial vehicle (uav), and on business CARDS printed on modern English name for yourself.

It seems to be a new opportunity, but it is also a danger signal.
Low-level repeat, the Achilles’ heel of made in China?
Or the old story, a jewish opened a lucrative gas station, the second to the jews, opened a restaurant, the third to the jews, opened a supermarket… A gas station opened a Chinese money, the second the Chinese came and opened the gas station, the third Chinese, also opened a gas station…
In the smartphone industry, this story also staged a blockbuster, millet, attracted many companies throw into the mobile phone industry. In their, driven by China’s smartphone sales from less than 100 million sets of rapid growth in 2011 to 2013, 343 million units; The brands of the company to build large coke to pepper, from one hundred percent to orange moral integrity. However, after a vigorous hype, can barely survive finally only millet.

Probably built to last just other people’s stories, more and more people just want to build on the lift market, fry a short line, also is not focusing on core r&d product experience, etc. So, apple has launched a strong A8 quad-core processors, the hyped into China’s Internet the raise mobile phones the first big coke was frequent consumer complaints – screen cracked!
Market is not always on the side of speculators, starting in 2014, China’s smartphone market slowed his steps, from multiply into a growing only 10% a year, to the second quarter of 2016 and even appeared a negative growth. Then fry short-term speculators tied down soon, to go to the next round of the knockout. Managers in the world of mobile phone users use habits survey, 59% of the participants are satisfied with the current use of mobile phone special, and said it will continue to buy this brand of mobile phone. Visible, in this market, latecomers, and don’t have much opportunity.

China’s smartphone market sales
The original cool technology President Li Wangceng explains style mutation of the market.China communication industry after years of development, operators to end subsidies to reduce, and consumer also in reducing the frequency of the converter. Li Wang believes that the market demand reduction and the increase of the shipments, must bring the domestic smartphone industry into saturated stagnation.
In the upstream suppliers, distress is not also.
Collapse in October 2016, shenzhen letter photoelectric led in the production of mobile phone with touch screen, have been mail tunnels, jiuzhou, cool, and so on well-known enterprise of suppliers, from 2011 to 2013 smartphone the scenery in the days, led photoelectric letter had two expansion, to the front of the collapsed in 2016, the scale to turn over 70 times. Some insiders revealed to the media say: led photoelectric in 2013 entered the letter after has not fully fit phone screen area, when the production details and docking process, but a large number of orders. The data shows, the newly opened in shenzhen alone and more than 600 such plants.

Mobile phone China league secretary-general wang pointed out that “at present, in the domestic mobile phone brand or mobile phone suppliers, are many and disorderly, because the threshold is not high, and even many people who have also entered, not mobile phone industry like FuChang electronic boss is such, think this industry are profiwatch, so from a layman to enter.” Market bubble is obvious. The quench, once the market bubble burst, these companies can only face is doomed to end.

You what is the use of mobile phone brand
This is not just the smartphone industry will encounter problems. In recent years, the word overcapacity, frequently found in a variety of media, from the traditional industries such as cement, steel to solar pv, LED, emerging industries, such as smart wear low level repeated construction bring a lot of waste of resources. When smart hand ring and unmanned aerial vehicle (uav) on the mobile counters huaqiang north, how many people will see that another industry may make the mistake the smartphone industry?
Even the new concept of robots that have been hyped. “Made in China 2025” has just issued, manufacturers began in highlighting the new battlefield, midea, haier, and other famous enterprises are involved in different ways, the speed of the robot industrial park in spring. In 2016, our country was born four to five a week robot companies; In 2014, the data is two a week.
Although our country has two years in a row as the world’s largest robot market, but the reality is not so optimistic: in 2014 the Chinese market of industrial robot sales surged 54%, to 560000, but the sales of just 160000 local suppliers, other are from overseas suppliers. Which is a strong overseas manufacturers, is the most core components research and development and manufacturing capacity of ontology. In contrast, domestic robot company, mostly concentrated in the link of system integration, buy robot, according to the demand of the factory, installation and debugging, in order to meet the production requirement, the vendor cannot hold up a strong market competitiveness of industry.

Although overcapacity is a global problem, but because of the large data with the widely application of the intelligent interconnection, manufacturing the advanced countries will be using digital technology to realize point-to-point precise customization, as a result, based on the information asymmetry of excess production capacity is expected to be large-scale disappear – according to customer requirements to produce accurate orders, surplus products do not have the chance to appear at all.
Made in China, keen on low-level repetition will to where to look for opportunities for development and market space?

Who can escape the whip of price war?
In August of this year, lenovo announced the first quarter of fiscal 2016 earnings, according to the report, its mobile business pre-tax loss of $292 million; In China’s smartphone universal pathfinder, millet is not scenery external publicity, the media by millet submitted to the shenzhen stock exchange a document analysis, millet gross margin in 2013 was only 1.8%, while apple and samsung in gross margin was 28.7% and 28.7% respectively.

The two companies, was the main fight price war field. Four years ago, millet pull smartphone prices as low as 1999 yuan, then its red rice and smart phones price range control under one thousand yuan; In early 2016, lenovo launched a price 599 mobile phones, pointing to the red rice millet series.
Mobile phone China alliance secretary general wang say: generally do mobile phones, there are two directions, or the pursuit of cost-effective, selling more than others, but this style must be corresponding to the efficient operation, otherwise it may earn money; Or the pursuit of premium products, to make their own characteristics, although the price is quite high, but to profit by personalization.

Choice determinants of mobile phone brands
Due to lack of efficient operation, manufacturers use price build barriers to competition already paper-thin – it was not long ago, bought a cool the great spirit of zhou and refreshed the smartphone lowest price – $399! Millet, known as the price butcher, by each competitors with price is on the offensive.
Price war like a whip, and its harm to the whole supply chain. Have a cell phone, according to the supply chain, under the crazy price war, in order to obtain the survival of the nutrients, many mobile phone manufacturers are on the supply chain of endeavour – up squeezing suppliers, compromise quality to consumers.
Recently this year, dongguan, shenzhen, suzhou these phones OEM enterprise concentration from the area of supplier of bad news, many analysts believe the reason is that the lagging technology upgrading, such as FuChang electronic precision plastic mold manufacturing as its main business, for zte and huawei mobile phone plastic shell, widely used in the current mobile phone metal case, it seems to have been doomed.
Can see clearly if a bystander, in FuChang electronic management must also imagined “transformation” and “upgrade”.
But it is reported that in July 2014, FuChang electronic order for huawei mobile phone plastic shell, direct price of the goods on zero profit force other two bidding companies out. In the “the more you do, the more you lose” samsara, upgrade is out of reach.
Price war participants generally, flaunting the banner of “benefit consumers”, but in fact, consumers will eventually get the price of a whip. Before the Revelations of a domestic handset makers “in screen door” and “change core door” shows that in the price war, consumers are not cheap can be accounted for. Managers in the world’s survey, 58% of participants said when buying a mobile phone is the most attention is the performance, the most attention accounted for only 8% of the price.
In made in China, almost all the fields are filled with the smoke from the price war. Provoking air-conditioning industry price war in 2014, gree, and response to “what” of beauty, oakes said to proactive… In the television industry, established vendors will jointly to low-cost latecomers encirclement and suppression…
Manufacturers are keen to occupy the market with cost-effective, while financial author xiao-bo wu told the “scale runoff everything” made in China to ask a lot of people think that have the scale to have ecological, can only be closed loop, have a voice, just have bargaining power, have a cost advantage. This logic is familiar? Yes, it is “made in China = size + cost” of the textbook. However, it is “made in China 2025” want to get rid of the fate? Due to cost performance and scale advantage, which is formed by the cost advantage is the most unreliable in terms of long-term, is also the most no value!
Was the vigorous price war dizzy brain, manufacturers should stop to think that in less than twenty percent of market share to earn up to 90% of the smartphone industry profits of apple. Managers in the world’s survey, 48% of the participants are using apple mobile phone, and comes in second place for more than 30% of the distance between mobile phone brand.
Hold thigh contract manufacturers can walk far?
On December 11, 2014, foxconn announced the closure of its factory in chennai in India. In 2006, the domestic manufacturing giant follow in the footsteps of their big customer nokia came to India. But in recent years, with the decline of nokia until a takeover by Microsoft, foxconn India factory orders decreased dramatically. Company spokesman said the decision is based on the factory’s customer base and the corresponding changes in customer requirements.
In traditional cognition, supplier, contract and so on as long as it can hold giant enterprises on the thighs, if not rich, at least also can mix a – so much food on the supply chain vendors want to talk to apple “climb relatives” is proof of that. However, a big client may decide to contract manufacturer of life and death, contract manufacturers for the influence of the customer?
Reply FuChang electronic collapsed, huawei, said the company has an emergency switch to other suppliers, as soon as possible to eliminate the influence of product delivery; Used to be apple’s main suppliers of wintek, its collapse and have no effect on apple product upgrade; Samsung mobile phone supplier of huge losses, also have no effect on samsung’s new product launch.

Behind this poignant contrast, is the fact that a helpless: smartphone’s contract electronics industry after decades of development, but mostly in the industrial chain of low-end, thin margins, and completely dependent on a single customer. Customers in the roll out new models for quick update iteration, hardware products, and suppliers in order to cope with a price war, not according to industry trends to adjust their own production chain, nature also cannot follow such rapid product upgrade.

IT famous critic jing-hua jia has offered such a question: if in the supply chain at the bottom of the hardware supplier can dominate the development of new technologies, will eventually be ruthless eliminated?
But, to achieve the goal of this is how difficult!

FuChang electronic after bankruptcy, although to longgang district government, combination with several companies to FuChang electronic restructuring, but the parties involved to restructuring prospect is not optimistic. Perhaps no one can offer back for a decline of enterprise’s secret recipe, but from the failures of the supplier, and the entire smartphone industry development, industry, or other can be found that can avoid the trap.

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