Gadgets & Electronics, Telecom & Wireless

Is The Market Cooling For Chinese Smartphone Sales?

Selling smartphones and tablets in China has become cutthroat as dwindling margins and consumers' appetites for cheaper phones have eaten into the profits and future plans of one of China's biggest smartphone makers.

Chinese smartphone maker Coolpad published its semi-annual performance for the first half of 2016, stating that the company's operating revenue was HKD5.277 billion, a year-on-year decrease of 39.9% from HKD8.783 billion. Meanwhile, the company reported net losses of HKD2.053 billion, a year-on-year decrease of 173%.

According to Coolpad, its revenue decrease was mainly attributed to its group business unit restructuring and the severe competition of the Chinese mainland smartphone market during the first half of 2016. Its losses were mainly attributed to the sales of several rights and interests of the joint venture within the group.

During the six months ended June 30, 2016, Coolpad's revenue from the sales of 4G smartphones was HKD5.06 billion, a year-on-year decrease of 36.9%; its revenue from the sales of 3G smartphones was HKD102 million, a year-on-year decrease of 83%; and its revenue from mobile app services was about HKD81.9 million, a year-on-year decrease of 41.4%.

At the same time, Coolpad reported financing service revenue of HKD21.3 million, which was from a series of loans and financing services provided to suppliers, individuals, and peer financing companies.

In addition, the company's revenue from other products was HKD12.4 million, a year-on-year decrease of 23.9% from HKD16.3 million. The company's other products included smartphone accessories.

During the first quarter of 2016, China's smartphone shipment reached about 104.9 million units, representing a decrease of 5% compared with the 109.8 million units in the same period of last year. Statistics from market research firm Strategy Analytics show that Huawei smartphones were still leading the Chinese market during that three-month period.

However, there were signs that the company's development in high-end market was slowing down and its major competitors like OPPO and Vivo became more powerful. During the first quarter of 2016, OPPO exceeded Xiaomi to become the second largest smartphone maker in China. The company shipped 13.2 million smartphones, a year-on-year increase of 67%, and its market share reached 13% in China. OPPO's R series and A series products were well-received in second-tier cities and rural areas.

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