2017 channel war, will be the Chinese mobile phone industry decided to rank the last battle

The year of 2016, which we called it a bloody year, was ended up with the release of statistical data coming from competitive smart phone companies in China.

Although the third-party market statistics were significantly different, but they took almost the same order for the first and second tier for smart phone listing. Viewing of the global market, the top three Chinese manufacturers were Huawei, OPPO and vivo, they constituted of the first tier. There was great gap between the first and second tier with 20 million units , the latter owned the brands like: xiaomi , ZET, Lenovo. When taking into account the first tier had positive growth and the second tier had partial growth, this gap will be further enlarged in 2017.

From the domestic market seeing, Huawei, oppo and vivo constituted of the first camp and formed a three pillars of the trend; they had predominance in sales. Although Data of the various statistical companies was different, the domestic market ranked third brand vivo offered 71 million to 82 million units in 2016, the fifth-ranked xiaomi offered 41 million to 61 million units. There was still big difference of more than 20 million units.

From various statistics sources, Huawei’s sales remained basically the same, the global sales were 139 million units, which meant that Huawei had gotten rid of the raveling of the Chinese mobile phone manufacturers, at least it could battle with Apple, Samsung in sales. 2015, manufacturers like xiaomi, OPPO, vivo were still concentrated in the sales of 40 million to 70 million units, after a year of bloody fight to the end of 2016, the war was basically ended. The Blue and green brothers reacted quickly to the market with the help of deeply developed channels and took advantage in sales .it attracted the eyesight of the industry and medias in 2016.

In fact, the rapid rise of the two blue and blue brothers, the industry had many interpretations, then people preferred that these two brands had strong sales gridding in the third to fifth tier cities.

No matter Huawei, xiaomi, Gionee, Coolpad, Oppo or vivo, they have focused more on the development of sales channels from 2016 to 2017.

Sharpen your knives – Huawei, xiaomi

In fact, as early as the beginning of 2016, Huawei made a strategic layout for offline channels, which was called “ Thousand counties plan” ,it attracted little attention once, but the result showed it’s just the plan taking effect and it played a sufficient support role in supporting the Huawei domestic market.

People felt astonished when they knew a county level distributer mentioned 350thousand units was not a problem in half a year of Huawei Mate 9, even it has a price tag of 3500 yuan.

In fact, Huawei’s offline channels were extremely growing fast in 2016 .Zhu Ping, the president of customers business of Huawei in Great China area told the media that the experience stores prefectural-level cities had increased to nearly 500, and the county-level stores had increased to 920, in the middle of 2017, the aim in 1 thousand counties would be achieved.

More terrible details also released from zhuping: Huawei planed to cover 2000 county level cities from 12,500 counters in 2016 to 100,000 co-counters by the end of 2017. According to recent development speed, it will come true.

Except to the experience shop and cooperated counters, Huawei pushed its franchised stores . by the end of 2016 ,it had already owned  franchised 600 stores, 3000 cooperated stores. One year later ,this plan will come to 5000 outlets in 1000 county level cities.

Offline channels development showed the determination of Huawei to fill up the shortage in sales channels.

Differentiating from Oppo and Vivo which used contracts to bind shares and benefits together with distributers. news indicated Huawei aimed to develop channel management and control system  based on cloud ERP to manage the sales of global stores.

The establishment of this system, not only showcasing Huawei’s management capabilities, but optimizing allocation of store resources. It is reported that by the end of 2016, Huawei’s terminal control platform has access to more than 30,000 mobile terminal retail stores.

Xiaomi chose another way by separating xiaomi home from xiaomi ,and the former was taken responsibilities by the third party.

On January 12nd,xiaomi’s annual meeting, Leijun confessed xiaomi was a phone company and also a new retail company ,when he came across the low sales and shrinked market share, but who once claimed xiaomi was an internet based company. he also expressed Mi home would newly open 200 stores and up to 1000 stores in the future 3 years.

In fact, the past few years, the development of Mi home could be ignored, by the end of 2016, there was only 50 Mi home and mainly in the first and second-tier cities.

Before 2016, Mi home is for brand exposure and after sales care, from 2016, it began sales ,that was so called open shopping experience mode “new retail”.

Although “mi home” was not taking effect in the third to fifth tier cities ,which was its shortage . but Leijun was satisfied with its hyper market mode . In 2016 China e-commerce development summit, Lei Jun said, the average annual revenue of each Mi home reached.

Xiaomi went a completely different way from developing the traditional channels, if it complete 200 stores establishment in 2017 and 70 million yuan for each store, it might be some help but not enough for returning to the first tier market.

In the long run, xiaomi suspected its original Internet model, only 1000 stores could achieve the rapid sales growth for offline channels.

In fact, not only Huawei, xiaomi intended sources to offline channels, Meizu, gionee, Coolpad also released news of it in 2017.

There were indications that after the marketing warfare, the new war of channels would come soon. OPPO and vivo, they are Known for strong channel development .in the following 2017, they will confront squeeze from stress of product and marketing . more crisis will come from the manufacturers scrambling offline resources.

Oppo and vivo channel strategy varied

Coolpad CEO Liu Jiangfeng recently said to the media: “OPPO and vivo keep the same way to run brands , we adhere to it.

Indeed, before 2017, vivo used layers of agencies of in the traditional agency system in channel development, the only difference was the attitude and interests ,technology and supports  to terminals.

And this relationship formed a long-term interests and value of the community, and therefore it established the channel-based sales, service and consumer insight system. In fact, comparing to the relationship between other manufacturers and channels, vivo had a steadfast cooperation with its partners ,and its competitors can’t break it with benefit.

At present, vivo’s offline store has reached more than 20 million, has become a huge system.

At present, the experience shops have amount to nearly 4,000 units, agents outlets and stores are 20 millions. Although this number has advantage for vivo, but Huawei ,xiaomi or Gionee are developing the offline stores with rapid growth. So it’s not easy for oppo and vivo keep the strength and feel at ease.

Just after the Spring Festival, the media released news that :vivo would upgrade its channel construction , the original terminal stores those were only for selling also support after sales soon . it’s just opposite to “MI home” splitting after sales service from xiaomi.

From the actual trend viewing, although there are totally 430 direct service centers, but competing with its annual sales of 70 to 80 million units, the centers are not enough.

Vivo main market are the third to sixth tier cities, 430 units of after-sales service centers are not enough to cover the 2000 county-level cities . To entitle 4000 outlets and partial collaborative stores services, will greatly improve the users experience and cover the county level cities .

From this point , vivo makes provision for rainy days.

Last few years , xiaomi developed so fast, but because of its poor after-sales service layout, resulting in decreased reputation cause most users can only return their phones back to the factory ,while the overall improvement of service helps vivo increase its sales .

Vivo customer service director Zhu Chuntao recently told the media:

“If the user need to repair the device ,they don’t have to return to the factory ,any of our sales point stores will arrange to fix . within three days , the devices will be delivered to the fix place ,one day for fix ,then return back to the sales point store in another three days . we guarantee 85% users with faulty devices can be fix in a week ,for the whole process.

Although the current OPPO has not disclosed its 2017 channel changes, but it has 200,000 sales terminals will also consider of strategy of constructing the offline channels as defense system .

Third, determine the battle of life and death channels

The crucial channel war

From the above analysis we can see the main manufacturers have already began strategic layout of offline channels . it’ll be a face to face competition.

No matter for OPPO/ ViVO ,who want to keep their advantage of offline channels or for Huawei ,xiaomi and Gionee who want to  strengthen their channel construction , If the industry technology has no major change in 2017, and not problems happen to products of each brand , the ultimate factor will be channels to decide to live or die.

From the current third-party data, the overall growth of China’s smart phone market in 2017 will be around 7.2% . from the growth rate in 2016 to judge , more manufacturers will die in this channel war.

A few years ago, Huawei Yu Chengdong said that China’s mobile phone industry can only survive one or two brands, it’s so absolute, but the overall trend was right.

From the current trend, the growth rate of Huawei was 21% in 2016, OPPO increased by 109%, vivo grew by 78%, even though the growth rate will be decreased in 2017, but the growth trend won’t disappear.

If no bad accidents happens , there will be more than 3-5 phone brands disappear without any real value .

The current mobile phone market online sales penetration rate is between 20% to 25%, with Jingdong, Taobao further getting into the third to sixth tier market, it has huge growth space, the proportion will be quickly enlarged in the next two or three years  , optimized advantages of resource allocation will be further released.

The future competition will be more complex, online sales will increase with the penetration rate of e-platforms development, the offline channels sales will gradually go into a slow decreased period.

There is the biggest problem for China’s mobile phone manufacturers ,that’s following . a few years ago ,xiaomi became hot because of internet based marketing , people followed . then the E-business shops have no advantages ,they move to offline channel development after OPPO and VIVO. If other brands won’t give up this thinking way , the Chinese phone industry has no stable development.

Viewing from the channel development to know a little of the future trend, even Huawei, OPPO and vivo in the first tier those had  deep development of channels , they can’t weaken the effects of E business . so in future, it’s not choose one between offline channels and E-business, but chose both of them ,they are complementary relationship.



Always on the move... Love to blog, write about smartphones, technology and telecoms. I also like to snowboard, when I have the time :p I'll be around for a while so, be prepared.

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