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Affected by the new coronavirus pneumonia epidemic, people have reduced the frequency of travel. The frequency and opening hours of public transportation and public places have also been significantly reduced, and most companies have postponed construction.

The mobile phone market cannot avoid being affected. Whether the offline stores of Apple, Xiaomi and other manufacturers announced suspension of operations, or the loss of production capacity of factories in the supply chain, or the planned launch of new products all turned into live broadcasts, the Chinese mobile phone industry is undergoing changes.

It's not just the Chinese mobile phone market that's affected. Researcher Strategy Analytics recently released a forecast that China's mobile phone shipments will decline by more than 30% in the first quarter, and that annual shipments will be 5% lower than expected. The closely related global mobile phone market will also decrease by 2%.

In this outbreak, many companies that have experienced SARS have made more positive moves in order to survive smoothly. During the SARS epidemic in 2003, the mobile phone industry was no exception and suffered the same as other industries, so we need to review the past to see which views and actions have value today.

Mobile phone sales decline during SARS

The SARS epidemic in China was mainly concentrated in the first half of 2003, exactly from February to June, which is the first two quarters. This time period has always been when the mobile phone and the entire communications industry released new products and set the goals and strategies for the whole year but suffered ruthless interference from the epidemic.

At that time, mobile phone sales were still very dependent on offline channels. Measures such as reducing the flow of people after the epidemic occurred and closing stores would inevitably lead to a significant decline in sales performance. JPMorgan Chase analyst Bhavin Shah surveyed mobile phone dealers in Beijing and Shanghai and said that sales during the epidemic fell by about 40% compared to usual.

It was not until the end of May that the SARS epidemic had eased significantly, people were able to travel more freely, and the computer city and mobile phone stores opened one after another, and the mobile phone market began to recover.

The decline in sales of the mobile phone industry during the SARS period has also led to the “failure” of domestic manufacturers' customary commissions and one-to-one sales models due to cost constraints. International brands have rebounded in a short period of time.

Fortunately, the decline in sales performance in the first half of the year did not have much impact on the whole year. According to data released by Analysys International, a total of 73.78 million mobile phones were sold in the Chinese market in 2003, compared with 68.16 million in the previous year. There was an improvement of 8.24%. After experiencing SARS, the Chinese mobile phone market finally survived.

Subject to the objective conditions of various types of mobile communication services that need to go to the physical business hall, the subscriber growth rate of the three major operators has been reduced due to reduced trips.

According to the Beijing Entertainment News, the number of Chinese mobile phone users increased by 5.7 million monthly in the first four months of 2002, and decreased to 5.02 million monthly in the SARS period. In April 2003, it was only 4.23 million.

However, under the premise that people's travel has been greatly reduced, communication needs throughout the country have been stimulated, and the frequency of users' phone and text messaging use has increased significantly.

In April of that year, China Unicom experienced a 40% increase in user talk time from last month. According to the statistics of the Ministry of Industry and Information Technology, a total of 62.68 million new mobile communication users were added throughout the year, in line with expectations of the previous year.

Since most of the factories were not in areas with high disease incidence that year, the impact of China's mobile phone manufacturing was not obvious. In the first half of 2003, 74.13 million mobile phones were produced in line with industry expectations.

Moreover, the industry remains optimistic. PCB board supplier Zhanhua once stated that the original 80 million global target was difficult to achieve, but the domestic market still has nearly 60 million demand, which can be the same as the previous year and continue to expand production capacity.

International manufacturers are slightly affected

In 2003, the 3G network had just begun to be used worldwide, but China is still far from 3G, and it is still the world of 2G mobile phones.

In addition to 3G and peripheral functions, mainstream mobile phone selling points have entered the market one after another: the concept of mobile phone GPRS Internet access has begun to emerge, color screen mobile phones have begun to be popular, and CRBT and MMS have become fashionable for some time.

Even with the bright spots that made consumers at that time, both international and domestic manufacturers still could not escape the joint effects caused by the SARS epidemic.

Motorola has said that due to the decline in the consumer spending of Chinese residents affected by the epidemic, sales in the second quarter of the year could not meet the expected target.

As soon as the news was released on June 9, not only Motorola's own stock price fell by 3.6%, but also stocks of companies in the communications industry in Europe and America such as Texas Instruments fell.

After a project manager was diagnosed with SARS, Motorola entered the home office from April 29 until it was released.

Motorola's Tianjin plant also entered shift mode, and production speed slowed down significantly. The originally expected press conference and other activities were also cancelled one by one.

In this year, Nokia launched a more fierce attack on the then market overlord Motorola. In the international market, it brought N-Gage, a game phone, and mobile phones with music and camera functions. It also began to introduce new CDMA models in China.

However, under the premise that the environment is not optimistic, Nokia also lowered its market expectations.

Samsung, which is preparing to compete in the mobile phone market, was also affected by the SARS epidemic and failed to achieve its sales target for the second quarter of the year.

In 2002, the Chinese market provided Samsung with $ 32 billion in sales, accounting for 20% of annual revenue.

However, from the perspective of the whole year, the three international mobile phone manufacturers have successfully passed the SARS epidemic.

Motorola's entire company reversed a loss of 2.5 billion U.S. dollars in the past year and reaped a net profit of 893 million U.S. dollars. Nokia also returned to sales and profit growth, with a global share of 38%. Samsung mobile phones also gained a foothold in China.

In general, the multi-quarter epidemic cycle did not affect the market strategy of international mobile phone manufacturers in China too much. In addition to changing the working mode and slowing down the production speed according to the epidemic situation, it basically went according to the original plan.

Due to the competitiveness of the product itself and the appeal of international brands, the annual market performance was in line with expectations.

Although the business suffered losses due to the epidemic, mobile phone manufacturers each lend a helping hand to fulfill the social responsibilities of commercial companies.

Companies such as Nokia, Motorola, Alcatel, Capitel, Siemens, Panasonic, Sony Ericsson, UTStarcom, and Bird have donated mobile phone products, cash and medical supplies to medical personnel and related departments.

Domestic manufacturers seize the potential of the epidemic

Different from the market strategy of international manufacturers focusing on brand image and high-end selling points, domestic mobile phone manufacturers started a price war at that time to grab the market from the former.

During the SARS epidemic, some analysts predicted that the reduction in sales due to the decline in foot traffic will press the pause button for an increasingly fierce price war. However, in fact, the special environment during SARS made domestic manufacturers' market strategies more active.

Compared with the international manufacturers that occupied the mid-to-high-end market at that time, the price war of domestic mobile phones seems very familiar now: color screens, multimedia messaging, GPRS, etc. are still new and selling points of thousands of international brands , When the domestic mobile phone becomes a thousand yuan standard, with today's words is full of cost-effective.

How did mobile phone manufacturers survive the SARS epidemic?

On the other hand, domestic mobile phones have also taken advantage of prices and other advantages to establish a huge channel to sink the market early.

During SARS, the situation in first-tier cities such as Beijing, Guangzhou, and Shanghai were more serious, and stores also responded to requests for suspension of business. The operation of third- and fourth-tier cities has not been greatly affected, and many sales points are still operating.

In this contrast, some mobile phone brands have even achieved a continuous rise in sales, and domestic mobile phone market share has begun to exceed that of international mobile phone brands.

Low-cost, multi-functional, multi-channel strategies are undoubtedly feasible. By the end of 2003, domestic mobile phones had gained more than 54% of the market.

This year, Bird hit 258 million yuan in marketing expenses and became the number one manufacturer with the market share of nearly 10 million units.

The relatively simple threshold and sales model of the mobile phone industry have made many price wars. After SARS significantly reduced the price and stimulated sales through incentives such as cars, sales in 2003 were 2 million more than the second-ranked Motorola.

At that time, the second domestic mobile phone TCL also had a terrible sales of about 7.5 million, and later it reached a cooperation with the French mobile phone brand Alcatel.

Panda, Amoi, Kejian and other mobile phone manufacturers also submitted their answer sheets in line with expectations. Domestically produced mobile phones did not seem to be affected by SARS.

After that, it was a series of downhills: whether it was Bird or other manufacturers, sales fell sharply in the next few years, and eventually disappeared into the market. International manufacturers, once regarded as their biggest rivals, live to the next era. Domestic mobile phones have passed SARS, but have not overcome their own problems.

In general, the epidemic did not have a more serious impact on the mobile phone industry. Instead, it was because of internal problems that opened the first reshuffle of the Chinese mobile phone industry.

I chose to use the profit margin for sales, but the limited innovation ability could not convert sales into long-term shares. Quality problems also led to ten million-level inventory, which pushed down Domino's first card.

The performance during the SARS period seemed brilliant, and the essence of the first batch of domestic mobile phone manufacturers who were strong and strong was directly hidden, leading directly to the end of almost all out in a few years.

Online Channels Showcase

Even though it was a feather in the same place, we still could find some wind directions, which might be the lighting for the current mobile phone manufacturers to safely survive the new coronavirus pneumonia epidemic.

The power of the sales channel cannot be ignored. The decline in the number of actual purchase users is not terrible. The terrible thing is that the products cannot be reached by users.

Once the domestic manufacturers have seized the opportunity that international manufacturers could not effectively enter the sinking market, and made a series of moves in the headwind environment of the epidemic, becoming more consumers' choice.

Now what we need to focus on is undoubtedly the online channel, which will become the main channel for mobile phone sales in the first half of 2020.

Not only is the mobile phone product launch conference started purely online, the convenience of purchase and payment, and the advantages of contactless distribution also allow online channels to become mainstream in this era.

The new type of coronavirus pneumonia is more capable of spreading, requiring more stringent quarantine, coupled with the incubation period of two weeks, the period of impact on mobile phone sales may also be longer.

It is inconvenient to go out shopping and open business, which may greatly impact offline sales channels and outlets, and may also cause manufacturers that have relied heavily on offline to exert a large amount of power online.

Because the epidemic has a longer impact period, mobile phone manufacturers have also put more effort into thinking about how to survive.

The design, production, sales, and delivery processes all take longer, but various costs and bills still run in the original cycle, which is likely to cause considerable financial pressure.

What's more, 5G-related R & D in the past two years has consumed a lot of budgets from various manufacturers, and is particularly optimistic about relatively small manufacturers.

Fortunately, after many rounds of shuffling, the mobile phone manufacturers that have survived in the Chinese market to date have relatively hard power. Due to the decline in sales due to the epidemic, it is less likely that funds will break.

5G is both a pressure and an opportunity. After a whole year of warming up and waiting last year, the market is at a key point in comprehensively upgrading 5G.

There are a large number of subjective and objective needs in the consumer group, which are expected to translate into market performance; retaliatory consumption in the field has emerged after SARS, and it may repeat itself after the epidemic is over.

However, it cannot be overly optimistic. The considerable market performance after SARS cannot be separated from the demographic dividend, and the entire country's economy is in a rising period. Now that the Chinese mobile phone market has transformed into a stock market, it cannot be compared with the general environment of the year.

Learning the lessons and finding the positioning and route that suits you is the appropriate method for each mobile phone manufacturer to smoothly overcome the difficulties.