The Chinese mobile phone market has experienced 13 consecutive quarters of decline before 2020. In 2019, on the eve of the outbreak of 5G mobile phones, George Zhao, President of Honor, said that if he could survive this year, he would usher in a new dawn. In 2020, 5G is here, but what follows is not a spring breeze, but another cold winter.

1. Mobile Phone Vendors with New Product Delays and Difficulties in Stocking

In the IDC and Strategy Analytics forecast reports for the Chinese market, the mobile phone market shipments in 2020Q1 will decline by 30% -40 compared with the same period last year.

Affected by the first quarter, the domestic market's annual shipments will also decline by about 4%.

Even if there is a strong storm of 5G that is enough to set off the stock market, but under the negative influence of many aspects, the original plan was blown away, leaving only messy ground.

New product plan postponed

On February 13, GSMA officially selected to cancel MWC2020, which was originally scheduled to be held in Barcelona. As the largest event in the communications field, products, technologies or concepts from multiple related industries such as mobile phones, technology, and communications will all be on stage.

It is not only a stage for brands to show their style, but also represents the development trend of the industry in the next 1-2 years.

Before MWC2020 was announced by officials, domestic mobile phone manufacturers, such as OPPO, Vivo, Huawei, Realme and other brands announced that they would participate in this exhibition and will release new products.

Huawei will continue to increase the layout of the 1 + 8 + N strategy and update the "1 + 8" smart scene equipment in the strategy.

The OPPO Find series is finally updated again after two years, and the outside world looks forward to it being as exciting as the 2018 Find X.

Vivo's APEX concept phone has been upgraded to the third generation. Perhaps we can see from it the second generation of APEX.

Realme's global market has emerged suddenly, and it has ranked among the top ten in global market share in less than two years. It is even with LG and Lenovo. Will it bring the world's cheapest Snapdragon 865 flagship with cost-effectiveness as the main means?

Huawei originally planned to exhibit

Manufacturers' new product plans in the first half of the year will basically not be postponed. Generally, it takes 3-6 months for new products to be launched from launch to launch.

In the first half of the year, whether it is a flagship model or a mid-to-low-end model used to expand the market, the layout has been basically completed; however, the new product plan in the second half of this year will be affected There may be delays.

The manufacturer ’s exhibition has become an “online conference”, and the popularity and reputation are obviously diminished, especially for manufacturers who do not focus on new mobile phones: Compared with single products, the ecological construction of the system is difficult. Attracted the attention of ordinary consumers.

However, with the cancellation of MWC2020, the focus of domestic mobile phone manufacturers may be on MWC Shanghai in the middle of the year, and the holding time is generally between June and July. At that time, manufacturers may show products and technologies in the planning stage.

Surge in stocking pressure

The mobile phone products that have been prepared before the release in the first half of the year cannot be restless, and they will face a more severe stocking situation in front of them.

Obviously, the resumption of work in large factories is higher than that of technology companies, and greater population density requires more stringent precautions and approval for resumption of work.

China, as the world's largest consumer electronics producer, has mobile phone foundries all over the country. Of course, the most famous is Foxconn.

Foxconn's journey to resume work seems to be bumpier. For example, Zhengzhou Foxconn has resumed work since February 10, but at that time, only about 10% of the returnees were due to various personnel. Then Zhengzhou Foxconn gave cash encouragement to employees in the digital product business group. The desperate need to recover its production capacity is clear.

It is worth mentioning that Zhengzhou Foxconn's most well-known in China is the assembly of Apple products.

Foxconn's resumption is a microcosm of other domestic foundries. It is difficult for the factory to resume work. Even if a new product is launched, it can only be a “PPT mobile phone”. Only after the output is increased can the product be more widely marketed.

OPPO, Vivo and other brands that are mainly based on offline channels will be greatly troubled because of different market strategies and profit methods. Without sufficient products, the advantages of channel sinking will also be difficult to play.

In contrast, online-based brands have experienced less pressure to stock up. By extending the snap-up cycle, limiting single supply, changing the supply ratio of online / offline channels, launching before listing, and other means, online brands such as Xiaomi and Honor have more time to wait for factory capacity to recover.

Unsustainable supply chain collaboration

Apple Cook was recommended to the CEO's high level because of his ability to control the supply chain. The destocking strategy has well dispersed operating costs such as Apple inventory to upstream manufacturers such as the supply chain and foundries.

In fact, the destocking strategies of domestic mobile phone manufacturers are also used quite well, and a large number of brands maintain low inventory.

When talking about the impact of the epidemic on the mobile phone industry, Lu Weibing mentioned that in the short term, the impact of consumption will be seen, and in the medium term, the supply chain will be coordinated.

Literally, it is not difficult to understand. To use inventory to spend the first consumption cycle, manufacturers need to ensure the supply of products through a strong supply chain collaboration. However, currently uncontrollable factors have led to "synergy" becoming a dead letter.

The upstream and downstream coordination of the supply chain will become the decisive factor in this "war epidemic." Taking Hubei as an example, there are two domestic mobile phone panel supplier production bases in Hubei Province: Tianma and BOE.

The upstream and downstream collaboration of the supply chain requires every company to participate. If the companies on the chain are not well connected, the supply process will obviously be blocked.

On the other hand, there are also differences between supply chain collaboration and deep cooperation. It is said that the eggs cannot be placed in the same basket, and the supplier will definitely not supply only one company, otherwise it will be constrained.

Obviously, long-term stable cooperative manufacturers will be more favored by the supply chain, and those brands with smaller purchase volumes will double the possibility of resource constraints.

This cold spring, even more sad are those small manufacturers.

New technology may be delayed

Newer technology is a powerful magic weapon for mobile phone manufacturers to compete for the market. Affected by the epidemic, many of the technology expected by the outside world this year may be delayed for installation, such as the high-profile screen camera.

Every change in the shape of the mobile phone will almost activate the consumer's enthusiasm for consumption, especially for Chinese users who have been eager for "true full screen" for so long. An opportunity to hold a full screen mobile phone in your hand is Don't miss it.

Subject to the cyclical impact of product planning and technological research and development due to the epidemic situation, we will see that the possibility of these new technologies will be further reduced in the second half of the year.

2. Consumption enthusiasm has been greatly reduced, and the Matthew effect has become prominent

In the more than one month of the nation's "anti-epidemic", pedestrians on the streets were sparse. In the case that most cities in the country have begun to restrict community travel, we can only I saw pedestrians who had finished shopping in the supermarket and rushed home with large bags.

As far as consumers are concerned, "replacement of mobile phones" is no longer a strong demand at this stage.

Consumption enthusiasm further tightened

For the mobile phone industry, the first quarter is certainly not the absolute off-season, but compared with the remaining three quarters of the year, the overall mobile phone shipments are still significantly lower.

The long-term "isolated" life state inevitably inhibits our various needs. Only when the epidemic has passed and life is back on track, consumer enthusiasm will be further released.

Obviously, in addition to consumer demand related to "epidemic prevention", everything else has to be put aside: How important is it to buy a mask when buying a mobile phone?

Small manufacturers struggle, Matthew effect highlights

A parable in the New Testament Matthew ’s Gospel says: “If you have anything, give him double. If you don’t have anything, take everything that he has, and use it to describe Matthew. The polarization of the effect designation is indeed appropriate.

Although the Matthew effect itself has certain limitations, it is suitable for the mobile phone market where almost no new brand has entered.

In the process of brand building, products must be the foundation, and user brand loyalty, brand awareness and brand culture established through products are the ultimate purpose of brand building.

This will cause consumers to lean towards more famous or familiar brands in their purchase decisions, while niche brands will be shipped directly, which is a manifestation of the Matthew effect.

Under the influence of the epidemic, it is more difficult for small manufacturers to compete with large manufacturers in the supply chain: the supply chain is also more inclined to provide services to larger and larger manufacturers.

In other areas such as supply chain, technology, marketing, and product attention, it is difficult for small factories to compete with large ones. In the case that mobile phone manufacturers have overweight 5G terminals, the survival environment of small manufacturers will be even worse.

Price pressure from upstream supply chains

Several major components of mobile phones, such as DRAM, CMOS, and display panels, inevitably appeared out of stock during the "anti-epidemic" period.

When Xiaomi Mi 10 advertised the first use of Micron's LPDDR5 memory, it did not give up Samsung's LPDDR5. It was also because of the epidemic that Micron could not complete the supply of DRAM.

In Marx's economics, the price of a product is often attributed to the "value" of the product itself, but in fact, the price is more determined by the relationship between supply and demand.

The factory gradually enters gradual resumption of work, manufacturers' accelerated procurement, and the inability to fully recover production capacity will continue to tighten the market supply. It is also reasonable for suppliers to increase prices at appropriate opportunities.

General bulk purchases will have a ladder price, and the larger the brand (order volume), the stronger the bargaining power. Not only do small manufacturers face selective supply, they also face higher price increases than large manufacturers because of market supply issues.

Should more costs be allocated to the selling price of the product? Failing to catch the empty window period of this month like Xiaomi 10, the price increase will further reduce the market's ability to accept small manufacturers.

3. Offline advantages no longer, or promote OV to accelerate transformation

From the release of Xiaomi Mi 10 to today, a total of two snap-ups have been launched online. Due to the suspension of Xiaomi Home, offline sales have not yet been carried out.

For the mobile phone industry, in the next month, "online" will become the most important channel for product and brand development.

Offline advantage is no longer, online is the only choice

Before February 14th, Apple temporarily closed the Apple Store for some time, and currently only opened retail stores in a small number of cities.

Domestic provinces and cities have different opening hours for non-essential locations. In a short period of time, mobile phone manufacturers will use online as the only channel to publish and sell products.

Experiential consumption is the construction direction of domestic mobile phone manufacturers' offline sales system this year, and consumers who chose to consume offline in the past will pay more attention to the accumulation of vision, touch and personal emotion in addition to products.

However, with the suspension of a large number of offline stores, whether it is a direct sales system or a cooperative system, offline has almost become a dead end.

Online brands such as Xiaomi are happy to see it happen, but the strong players in offline channels, OPPO and Vivo, may face a period of pain.

OPPO, Vivo or take this opportunity to transform

Vivo and OPPO have been in transition since 2019. Vivo's iQOO mobile phone, it seems that Realme has inextricably linked with OPPO, and has achieved a double harvest in sales and word of mouth. From the results, the two big brothers in the offline transition are a smooth road.

However, Vivo and OPPO are pursuing a dual-channel strategy, which is another growth method chosen under market saturation. Offline channels have not been abandoned.

Both the Vivo X series and OPPO Reno will release new products in the near future, and these two models have been based on offline channels for many years, and it is difficult to meet the needs of online consumers in terms of price.

Vivo and OPPO have their own factories, but the possibility of stocking up before the outbreak is not high, even if there are only a small number.

The sinking of the channels of the two major brands is the best in the global market. Without sufficient supply, it is difficult to bring the advantages of offline channels into play, which may force Vivo and OPPO to accelerate the transformation of online to reduce sales decline.

When online consumption becomes a habit

Some things are easy to know.

Lei Jun criticized OPPO and Vivo 4 years ago, saying their success was due to "asymmetric information." This is well understood, it is because OPPO and Vivo use opaque information to sell high-priced and low-priced mobile phones to consumers in remote markets.

The offline success of Vivo and OPPO is naturally impossible because of this seemingly nonsensical reason. The construction of channels and the popularity of the brand are extremely important reasons.

But we can't deny that if the audiences of OPPO and Vivo have more channels to obtain information, will they break their offline model?

The outbreak may be an opportunity. When past OPPO and Vivo mobile phone users found that there are still so many high-priced and low-priced mobile phones online, how much loyalty will they have left for the brand?

In particular, online shopping is very addictive.

4. 5G helps the industry recover

Lei Jun mentioned in the speech of the Xiaomi 10 conference a few days ago that the mobile phone market was like the pause button was pressed, and the sales volume in the first quarter dropped sharply, but the next two quarters will usher in a "retaliatory" rebound.

This view coincides with the predictions of experts in other industries. When the epidemic situation is gradually controlled, people's work and life are back on track, the backlog of consumer enthusiasm during the epidemic period will be fully released, and the mobile phone market will usher in once. Switch upsurge.

As mentioned earlier, 5G will become a decisive factor in consumer purchase decisions this year, and it will help the mobile phone market to say goodbye to the winter.