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Samsung Electronics‘ share of the Chinese smart phone market

Samsung Electronics’ share of the Chinese smartphone market has fallen below 1%, a study shows. Analysts contended that the market restructuring strategy implemented by the company last year does not appear to have paid off.

An Apr. 4 report by the market research firm Strategy Analytics (SA) showed Samsung Electronics accounting for a 0.8% share of the Chinese smartphone market in the fourth quarter of 2017. The number was even lower than the initial projection of 1.7%. Once the leader in China with a 20% market share, the company is now seen as almost completely marginalized, tumbling to 12th place last year.

The slide below the 1% mark in market share is Samsung Electronics’ first since statistics on Chinese smartphone sales were first kept in 2011. The company’s market share has been in steep decline since its first-place finish in 2013 with 20%. During 2017, it sank from 3.1% in the first quarter to 2.7% in the second and 2.0% in the third. Its 2.1% average market share for 2017 was just one-tenth what it had been five years before. Sales last year amounted to just 9.8 million units – the first time the company failed to clear the 10 million mark since 2011.

Samsung Electronics stressed that “while the overall share of the Chinese market has fallen, premium phones are poised to cross the 10% mark soon.”

“We are focusing our energies on the premium phone market,” the company said, noting that premium items in the Galaxy S and Galaxy Note series still only have single-digit shares.

The dip below 1% is all the more painful for Samsung after its Sept. 2017 launch of the Galaxy Note 8 in the Chinese market. Despite restructuring its sales organization last year – including replacements of its Chinese corporation officials and improvements to distribution structure – it failed to turn the tide in its market share.

Samsung Electronics cannot afford to give up on China, the world’s single biggest market with over 400 million units in annual smartphone sales alone. Since the mid-2010s, it has been losing ground to local competitors touting their higher “cost-effectiveness.” It took particularly large hits with the Galaxy Note 7 battery fire episode and the deployment of the THAAD missile defense system the following year. While the Galaxy Note had been used as a high-end work smartphone by Chinese companies, the fires resulted in it losing out on demand for replacements. No sooner had it begun achieving a recovery with its Galaxy S8 than it found itself once again hurt by the THAAD controversy.

Samsung Electronics has been going all out to turn the tide in the Chinese market, including recent large-scale events for the launch of its Galaxy S9. Questioned about the China slump at a Mar. 23 general meeting of shareholders, Samsung Electronics mobile communications president Koh Dong-jin replied that the company was “in the process of recovering, with nearly double-digit growth for recent flagship models like the Galaxy S8.”

But the future does not appear entirely bright. The Strategy Analytics report projected Samsung Electronics’ market share for the first quarter of 2018 would remain at 0.8%, the same level as the fourth quarter of 2017 – suggesting the Galaxy S9 launch is unlikely to reap major effects.

“China’s own brands have completely taken over the market right now with their cost-effectiveness,” an industry observer said. “Apart from Apple, overseas companies have all been basically marginalized.”

Outside of Apple in fifth place at 11.5%, all of the other companies in the top ten for the fourth quarter of 2017 were Chinese, including Huawei, Oppo, Vivo, and Xiaomi.

By Choi Hyun-june, staff reporter

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