Chinese Mobile Phone Market Booming; Guohong Shuidi Competes with Low Cost

BEIJING, March 29, 2012 /PRNewswire-Asia/ -- China's domestic mobile phone market has constantly seen fierce competition for market share with high cost-performance products over the last two years. Recently, the country's Chongqing Guohong Technology Development has participated in the competition by launching a new handset called Shuidi, which is sold at only RMB698 (approx US$100). According to data available, the handset was almost out of stock at 360buy.com shortly after its availability at the website, demonstrating its success and the intensifying competition in the Chinese mobile phone market. 

A new era in which the smartphone represents the direction indicator to the development of the mobile phone industry

Smartphones featuring the Android system today are the most popular among consumers after years of development. Apple spearheaded the development of smartphones, which has prompted many other handset manufacturers to follow suit. The first beneficiary of the emulation was HTC, whose G1 and G2 were two of the best-selling handsets, second only to the iPhone. In addition, all of HTC's G-series handsets launched afterwards were popular with Android fans.

Android has become the No.1 system in the Asia-Pacific market in terms of market share, with a handful of leading mobile phone brands including Samsung and Motorola incorporating it as Android technologies develop fast. Driven by such rapid development, more and more mobile phone manufacturers want to incorporate the Android system in their products.

China's mobile phone makers fight back, Chongqing Guohong Technology Development launches low-price "Shuidi" phone

China's domestic mobile phone makers have joined the competition by launching new Android models for more market share. Prices of Android-based smartphones have continued on a downward trend. Among domestically-made smartphones, the "Xiaomi" phone is a good example. The strong sales of Xiaomi are due to its low price at RMB1,999 (approx. US$317), together with high-end configurations. The availability of "Xiaomi" triggered a new price war in China's smartphone market.

Since then, prices of smartphones have declined to below RMB1,000. Smartphones including ZTE U960S priced at RMB999, Coolpad 7260 priced at RMB980 and Huawei U8500 priced at RMB900 have been among the most best-selling models with high cost performance, showing that low pricing is the domestic producer's key to success.

However, the availability of Chongqing Guohong Technology Development's "Shuidi" phone will reshuffle China's mobile phone market, which is dominated by low-pricing models, triggering a new round of price wars. The "Shuidi" phone seemingly will continue the sales strategy of the popular "Xiaomi": high-end configurations, low pricing and online sales channel. However, the "Shuidi" phone further cuts the selling price to US$100. This could be the most attractive model in China's mobile phone market in 2012.

This may also be an unavoidable counterattack from Chinese handset makers, or just part of their strategies for smartphones. In response to the fierce competition from foreign rivals, Chinese handset makers are beating back by introducing low-cost models to grab a larger share of the Chinese market boasting 1 billion users. It's still a toss-up whether Chinese makers will win or lose in the competition.

SOURCE Chongqing Guohong Technology Development