China's mobile phone market is experiencing negative growth. With several mobile phone manufacturing head brands occupying the majority of market share, the pattern of domestic smartphone brands in the Chinese market has basically taken shape. From January to December 2018, the domestic mobile phone market shipped 408.5 million units, down 11% year-on-year. Going forward, IDC expects 2019 to have flat growth, with positive growth from 2020 to 2022, due to the rollout of China’s 5G network.

1. Table 1：China Smart Phone Manufacturing
TrendsChina's mobile phone market is experiencing negative
growth. With several mobile phone manufacturing head
brands occupying the majority of market share, the
pattern of domestic smartphone brands in the Chinese
market has basically taken shape. From January to
December 2018, the domestic mobile phone market
shipped 408.5 million units, down 11% year-on-year.
Going forward, IDC expects 2019 to have flat growth,
with positive growth from 2020 to 2022, due to the
rollout of China’s 5G network.
With mobile phone manufacturers such as Huawei,
OPPO, Vivo, Gionee and Coolpad, Guangdong's
shipments continue to lead other provinces (See Table
2). Henan, which owns the Apple mobile phone
production base, the drop was directly related to
Apple’s poor performance in China. The sharp decline
in shipments in Chongqing may be related to the
decline in exports, and other regions, such as Yunnan
and Chengdu, are also taking advantage of
Chongqing's market share.
In Chart 3, we can see that the Top 5 cellphone brands
control more than 90% of the market share in China.
Smaller handset manufacturers rely on exporting
handsets to underdeveloped regions. However, for
smaller Chinese manufacturers, competition from the
Indian market is becoming more intense. As a result,
they are increasingly focusing on countries such as
Africa, Nepal, Southeast Asia, Bangladesh and
Pakistan.
Table 2：Manufacturing by Chinese Province
Rank Province 2017 2018 YoY
1 Guangdong 828 808 -2%
2 Henan 297 206 -31%
3 Chongqing 237 189 -21%
4 Sichuan 32 94 197%
5 Beijing 75 90 21%
6 Zhejiang 55 53 -3%
7 Jiangsu 61 49 -24%
8 Shanghai 47 47 0%
14 Guizhou 27 20 -36%
15 Yunnan 10 19 195%
Brand Manufacturing
Location
Market
Share
1 Huawei Shenzhen, Guiyang 31.6%
2 Vivo Dongguan, Chongqing 21.6%
3 Oppo Dongguan, Chongqing 20.2%
4 Apple Zhengzhou 8.8%
5 Xiaomi Beijing 8.44%
6 China Mobile ODM/OEM 1.2%
7 Meizu Zhuhai 1.1%
8 Samsung Dongguan 0.8%
9 Kangjia Shenzhen, Yibin 0.6%
Brand Manufacturing Location Market
Share
10 Sugar Shenzhen, Yibin 0.4%
11 Lefeng Chongqing 0.4%
12 Hisense Qingdao 0.3%
13 Gionee Shenzhen 0.3%
14 ZTE Shenzhen, Xian, Hangzhou 0.3%
15 360 Beijing 0.2%
16 Nokia OEM 0.2%
17 Coolbee Shenzhen, Yibin 0.2%
18 Little Pepper Nanchang, Chongqing 0.2%
Source - 中商产业研究院
Table 3：China’s Cellphone Ranking by Brand (2018)
-0.12
-0.1
-0.08
-0.06
-0.04
-0.02
0
360
380
400
420
440
460
480
500
2016 2017 2018
China Smartphone Manufacturing (million
phones)
China's Smartphone Manucturing
Stone Tan Report: Cellphone
Manufacturing
February 2019

2. Cellphone Manufacturing in SW China
Stone Tan has been covering Southwest
China’s cellphone manufacturing industry for
the past few years. As noted in Chart 2, a key
trend in 2018 was the rise in cell production
from Sichuan and Yunnan. It appears that cities
such as Yibin and Kunming have copied
Chongqing’s approach to attract Shenzhen
cellphone manufacturers to move or start
operations in their cities. As we noted in
previous reports, most cities offer attractive
logistic subsidies and equipment financing
incentives for these companies.
Aside from investments by Oppo and Vivo in
Chongqing, and Foxconn’s Guiyang plant
(which manufactures for Huawei), most of these
cellphone manufacturers will have to develop
markets outside of China. This will require 1)
developing a strong international sales
knowledge of key overseas markets such as
India and Africa and 2) Having cost competitive
cellphones that can compete on price (as most
of these phone companies have low brand
recognition).
Oppo Chongqing was invested by its parent (Guangdong OPPO) and is
expected to be put into operation in 2021. After full production in 2021,
it is expected to produce and sell more than 30 million smartphones. In
January 2019, Oppo announced that it will build a R&D HQ in Yubei as
well.
ODM HQ Manufacturing
Centers
Shipmen
t Share
Top Customers
Wingtech Shanghai Jiaxing 13% Xiaomi，Huawei，Lenovo，Meizu，Asus
Huaqin Shanghai Dongguan,
Nanchang
22% Huawei, Xiaomi, Meizu， LG
Hangzhou Longqi Hangzhou 8% Xiaomi, Lenovo, Huawei
Shanghai Wind Shanghai Chongqing 5% Meizu, Lenovo, Huawei
Shenzhen Tinno Shenzhen 7% Sugar
Other 45%
Aside from the trend of consolidation, another trend in China is the rising use of the ODM model within
the industry. ODM is currently 23.7% of global phone shipments. Counterpoint Consulting believes that
this level will reach 35% as companies expand to newer markets and focus on time to market.
The top five global IDH/ODM leaders are all Chinese companies: Huaqin, Wingtech, Longcheer and
Wind. It was estimated that China based ODMs alone captured more than 90% share of
the global smartphone shipments designed/manufactured by ODMs in 2017. Table 4 shows that the
majority of these companies have their HQ in the YRD and Shenzhen areas, although some have
established manufacturing presence in other areas of China.
Table 4：China’s Key ODM Players for Cellphone Industry (Source - Counterpoint)
Table 5: SW China Cellphone Production Map
Stone Tan Report: Cellphone
Manufacturing
February 2019

3. Stone Tan Report: Cellphone
Manufacturing
February 2019
India Share Africa Share
1 Xiaomi 29% Samsung 23%
2 Samsung 22%
Chuanyin -
Tecno
18%
3 Vivo 10%
Chuanyin -
Itel
13%
4 Oppo 7% Huawei 7%
5 Chuanyin 5%
Chuanyin -
Infinix
7%
6 Other 27% Other 32%
Chuanyin is becoming a successful case study for many
lower end cellphone companies. The company has two
factories in China (Huizhou and Chongqing), while also
operating factories in India, Bangladesh, and Ethiopia. Its
low pricing has allowed it to compete against larger
cellphone companies.
Table 6: Cellphone Market Comparison (million
phones)
Table 7: Cellphone Market Share for India and Africa
Overseas Market Analysis：
India - Overall India mobile phone shipments
crossed 330 Million units for the first time ever with
smartphones capturing almost 44% of the total
volume in 2018. In 2018, the Indian government
imposed a 20% tax on fully built mobile phones. It
also set a 10% duty on imports of populated printed
circuit boards (PCBs), camera modules and
connectors. This has resulted in more than 80% of
cellphones to be assembled in India, leaving only
20% of the market for Chinese exporters.
Africa - In the past five years, mobile phone users in
Africa have grown at a rate of 20% per year,
becoming the global smartphone sales growth. In
2015, the sales volume of mobile phones in Africa
was 60 million units and increased to over 200 million
in 2018. The price-point for most African smart
phones is still very low. Chuanyin’s average phone
was 98 USD while Samsung and Huawei had a price
point around 200 USD.
Summary - Due to India’s import tariffs, smaller
cellphone manufacturers need to figure out which
markets to export their products to. Price and cost in
the most attractive markets is essential in having
success, as shown by Chuayin’s success in Africa
(see Table 7). According to the analysis in the
African market, the average price of smartphones
sold by voice is US$96, while the average selling
price of Huawei or Samsung in this market is
US$200. In Table 8, we analyze a number of
countries which may be suitable for these
manufacturers. Other potential market packages
include Central Asia, South America and Southeast
Asia. Understanding how to open sales channels in
these markets and ensuring effective logistics and
control costs will be a major challenge for Chinese
small handset manufacturers.
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
China India Africa
Cellphone Market Comparison between China,
India, and Africa
Smart Phones Non-Smart Phones
Table 8: Countries with Population over 30 million and
GDP/Capita under 15,000 USD

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