Why are Chinese mobile phones popular all over the world not as good as local ones in Japan?

As a mobile phone brand founded over 10 years ago, Xiaomi has been riding the wave of smartphones and has become a world-renowned smartphone brand. On December 9, Xiaomi's official account announced on Twitter that it has been "1 year since Xiaomi entered Japan", which surprised many netizens - what? Xiaomi only entered the Japanese market last year?

Xiaomi's 1st anniversary in Japan

Xiaomi is not the only brand that has overturned people's imagination. Huawei, OPPO, vivo and other domestic brands that are ranked among the best in the global smartphone market are expected to surprise the Chinese people with their performance in the Japanese market. In the Japanese smartphone market, the initiative is basically held by local brands, such as Sony and Sharp, while Apple is the only international brand that stands out.

So, why can't Huawei, Xiaomi and other domestic mobile phone brands, which are popular all over the world, beat local brands in Japan? What is the secret of Apple's winning the market?

What kind of mobile phones do Japanese people like to buy?

In the impression of many Chinese people, the Japanese like to use flip phones the most. The picture of a group of cute girls in school uniforms playing with flip phones can instantly transport people to the streets of Japan. In fact, after entering the era of smartphones, the Japanese are no longer obsessed with flip phones as before. Now the penetration rate of smartphones in the Japanese mobile phone market is gradually increasing.

Data agency IDC recently announced the shipments of mobile phones and smartphones in the Japanese domestic market in the third quarter of 2020. From a broad perspective, the two figures are 6.751 million and 6.587 million respectively. A rough estimate shows that the shipments of smartphones in Japan accounted for 97.57% of the overall mobile phone market in the quarter. Although the shipments and stocks are not comparable, this ratio is enough to show that contemporary Japanese people have a very high tendency to buy smartphones.

Specifically for smartphone suppliers, Apple, Sharp, Fuji, Kyocera and Sony ranked in the top five. Among them, Apple took the first place with an absolute advantage of 43.7%, and the other four were all Japanese local brands, accounting for nearly 40% of the market share, and "Others" together shared a "high" 16.8% market share.

Japan’s smartphone shipments in Q3 2020 (Source: IDC)

Apple needs no introduction. Sony, Sharp, Fuji and Kyocera are all established Japanese companies whose mobile phone products have entered the Chinese market. However, under the pressure of international brands such as Apple and Samsung and domestic brands such as Huawei and Xiaomi, these Japanese smartphone brands have either withdrawn from the market or are on the decline. Currently, only Sony is still making a name for itself, but its market performance is not very good.

Why did domestic mobile phone brands fail in Japan?

Compared with Japanese mobile phone brands in China, the development status of Chinese smartphone brands in Japan is not so bleak, but the situation is not very optimistic. IDC data has shown that Chinese mobile phone brands such as Huawei, Xiaomi and OPPO that have entered the Japanese market are all classified as "Others". If Samsung, the world's largest smartphone brand, is also developing in Japan, the combined market share of domestic mobile phone brands will be even lower.

Global smartphone sales ranking in Q3 2020 (Source: Gartner)

Another data agency, Gartner, released a Q3 global smartphone sales ranking that showed Samsung, Huawei, Xiaomi, Apple and OPPO ranked in the top five. Huawei, Xiaomi and OPPO, three of the three domestic manufacturers, took up three of the top five positions. This was a highlight moment for domestic mobile phone brands. However, the more "highlight" the global market is, the more "dim" the Japanese market appears.

Why is this the case? We can first understand this "contradiction" from the perspective of consumers.

World Brand Lab previously released the 2020 Asian Consumer "National Brand" Loyalty Survey Report, which listed the top 10 brands most loved by consumers in each region. The results show that within the Asian market, the consumer loyalty of people in different regions varies greatly.

2020 Asian Consumer "National Brand" Loyalty Survey (Source: World Brand Lab)

As shown in the figure above, brands in red fonts are local brands, and brands in black fonts are foreign brands. In mainland China, four brands including Huawei, Xiaomi and Haier were selected, and the "national brand" loyalty was 56%; Vietnam, the Philippines and other countries formed two extremes with Japan. For example, the top 10 brands favored by Vietnamese consumers are all from foreign countries, and the "national brand" loyalty is only 9%. In Japan, the only foreign brand selected is Amazon, and the other 9 brands are all from local countries, including Sony. Japanese consumers have always been very loyal to their country's brands, and this latest survey is no exception. Japan ranks first among the 13 regions in Asia Pacific with a high loyalty of 81%.

Japanese consumers' strong trust and pursuit of national brands have provided soil for the growth of Japanese mobile phone brands. At the same time, this environment of high brand loyalty is actually a disadvantage for the development of foreign brands. If Chinese mobile phone brands want to expand in the Japanese market, they need to not only have good products, but also work hard on brand building.

The extremely high local brand loyalty has invisibly established a layer of market protection for local mobile phone brands. In addition, Japan's operator environment cannot be ignored.

The Chinese smartphone market has long passed the operator era, and most consumers have little interest in contract phones, or even sneer at them. However, the cooperation between Japanese operators and mobile phone brands is booming, and it can even be said that the Japanese mobile phone market is basically controlled by operators.

In Japan, contract phones feature a "benefit" - consumers only need to prepay a portion of the phone bill, and the operator will give the phone away "for free". This is similar to the contract phone routine in China, but Japanese operators are more transparent in package rates and do not have other fancy operations, so consumers are willing to buy phones in this way.

Moreover, because of the close cooperation with mobile phone manufacturers, Japanese operators will also customize the mobile phone systems to create a relatively closed system. Users need to pay a higher learning cost when switching to other brands of mobile phones, which improves user stickiness to a certain extent.

Why Apple?

At this point, someone will definitely ask, they are all foreign brands, why is Apple the only one that is "the outsider monk who knows how to chant sutras"?

In developed countries, consumers have certain demands for brands. Apple has more advantages in terms of brand. Whether in terms of brand awareness or brand influence, Chinese mobile phone brands are still far behind. Of course, judging from the performance of Samsung mobile phones in Japan, brand is not the decisive factor in sales.

Although Apple's localization strategy in the Chinese market has been criticized by some consumers, it has set an example for other international brands in Japan. Like Japanese brands such as Sony and Sharp, Apple also sells mobile phones through cooperation with operators. The most critical point, which is also something that you may not expect, is that Apple has given local consumers a lot of subsidies, which is very attractive in terms of price.

In the Japanese mobile phone market, the term "high cost performance" can even be applied to Apple. The carrier contract price of the iPhone is lower than that of Japanese brands such as Sony. Every year after the release of a new iPhone, Mobile China will provide everyone with a comparison of prices in various countries and regions around the world. Taking this year's iPhone 12 series as an example, the 64GB version of the iPhone 12 is priced at 85,800 yen (excluding tax), about 5,383 yuan, which is nearly 1,000 yuan cheaper than the domestic version and close to the price of the US version. Therefore, although the iPhone is known for its high price, the purchase cost that Japanese consumers need to pay is actually not high.

Models supported by iOS systems of all generations (Source: Statista)

In addition to its relatively attractive price compared to other markets, the iPhone's stable user experience and long system support time are also its advantages. Mobile China has reported on Statista's latest report that Apple can provide the iPhone with a system support cycle of up to 6 years. For example, the latest iOS 14 system is supported even by the iPhone 6s series released in 2015. In comparison, Android brand manufacturers are not as strong as Apple in terms of system support.

Xiaomi still has a chance

In addition to the above reasons, Apple's ability to stand out in the Japanese market and surpass local mobile phone brands is also related to its "qualifications". Apple entered the Japanese market in 2009 and has more than 10 years of local operating experience. Coupled with Apple's own strength and brand influence, it is not surprising that it ranks first. However, Apple's first-mover advantage is also a latecomer advantage for domestic mobile phone brands that entered the market later.

As mentioned above, the current shipment volume of smartphones in the Japanese market accounts for a very high proportion, which is a weathervane for the transformation of feature phones into smartphones. However, the stock of feature phones in the Japanese market is actually still very large, which means that the space in the smartphone market has not been fully released. eMarketer once released a report in 2018 that the smartphone penetration rate in Japan lags far behind many neighboring countries in the Asia-Pacific region, and the penetration rate was predicted to be only 56% that year. Domestic mobile phone brands have considerable experience and achievements in the popularization of smartphones in the domestic market, and now they also have the opportunity to complete a counterattack in the Japanese market.