Samsung loses its top slot in China

Chinese manufacturer Xiaomi took the crown from Samsung Electronics as the top seller of mobile phones in China in the third quarter.

In the second quarter, the Chinese company had taken the biggest market share for smartphones from Samsung, according to an earlier report by U.S. market research firm Canalys.

A report by U.S. market research firm Strategy Analytics released yesterday showed that Xiaomi’s share of China’s overall mobile phone market - including smart and feature phones - reached 15.4 percent in the July-September period, emerging as the No. 1 player. Samsung’s share was 13.5 percent.

When limiting the research to smartphones, Xiaomi was above the Korean manufacturer with a 16.2 percent market share. Samsung Electronics trailed behind with 13.3 percent.

This is a phenomenal achievement for the Chinese company as its market share in smartphones was only 6.4 percent a year ago, when Samsung dominated the market with 21.6 percent.

In the first quarter, Samsung’s market share was at 19 percent, which shrunk to 14.3 percent in the following quarter and to 13 percent last quarter.

Samsung isn’t the only one struggling in the Chinese market. Its biggest rival Apple had a market share estimated at 4.7 percent in the third quarter, the lowest recorded this year.

Shares of Lenovo, Huawei and CoolPad have also declined, while second-generation smartphone manufacturers such as Vivo and Oppo saw their market shares more than double from a year earlier.

The recent changes are propelled by the price competitiveness of Chinese smartphones as well as improvements in products that are now near par with Samsung and Apple products.

“Should the losing trend continue, Samsung could be faced with a situation in which it would even be hard to defend its double-digit market share in China,” an industry insider said requesting anonymity.

“Even more worrying for Samsung, Chinese brands including Xiaomi, Huawei and ZTE could enter the Korean market more aggressively starting next year,” the analyst said.

Huawei and ZTE have already entered the Korean market through mobile virtual network operators (MVNOs) and Xiaomi is negotiating with MVNOs to tap the Korean market.

Industry sources say Samsung needs to succeed with its entry-level smartphones, the Galaxy A3 and A5, which will arrive in the Chinese market later this month.

Samsung’s shares edged up 0.17 percent on the Kospi market yesterday despite its worsening smartphone business.

However, a local analyst said that the shares of Samsung will continue to struggle until the company announces improvements in its performance.

BY KIM JUNG-YOON [kjy@joongang.co.kr]