The tide of smartphone bankruptcies strikes, who will be the next to capsize?

It's an ordinary weekend afternoon. In Huaqiangbei, the largest electronic product distribution center in Shenzhen, merchants continue to use loud music to attract customers. However, in those mobile phone stores, there is a kind of loneliness that can't be concealed by the hustle and bustle - it used to be hard to find a shop, but now the empty counter rate is as high as one-third; Moments - They use the latest Apple models and sell phones and peripherals of unknown provenance.

During its heyday, Huaqiang North gathered more than 2,000 mobile phone-related shops. By imitating the appearance or some functions of mainstream mobile phone products at low cost, Huaqiang North produced a large number of cheap and low-end mobile phones, which were sold domestically and even exported. all around the world. And now, it is revealing the fact that the golden age of domestic smartphones is coming to an end with its dismal operating conditions.

The news gave a more tragic footnote: the 100% mobile phone that had received hundreds of millions of investment from Baidu and claimed to challenge Xiaomi gradually faded out; the Big Cola mobile phone, which was the first case of Internet crowdfunding, went bankrupt and went out ; Apple's iPad supplier and one of the world's top three panel factories, Zhongqiang Optoelectronics Nanjing Branch - Canyu Optical ceased production; Shenzhen star enterprise, Huawei ZTE's first-tier supplier Fuchang Electronics went bankrupt; Dongguan mobile phone foundry Gao Min, chairman of Zhaoxin Communications, committed suicide...

This list can be extended.

Some of the merchants dealing in smart phones also clearly felt that smart wearable accessories are hot in the market, and foreigners who purchase such products often appear in Huaqiangbei. So they started putting smartwatches, wristbands, and even drones on the counters, and printing their business cards with trendy English names.

This looks like a new opportunity, but it's also a red flag.

Low-end repetition, fatal injury made in China?

It's the same old story, a Jew opened a profitable gas station, a second Jew came and opened a restaurant, a third Jew came and opened a supermarket...a Chinese opened A profitable gas station, the second Chinese came and opened the gas station, and the third Chinese came and also opened the gas station...

In the smartphone industry, such stories are also On the stage - Xiaomi's blockbuster has attracted many companies to join the mobile phone industry desperately. With their impetus, China's smartphone sales have grown rapidly from less than 100 million units in 2011 to 343 million units in 2013; brands created by these companies range from Big Cola to Little Pepper, from 100% to Orange Festival. However, after some vigorous hype, in the end, only Xiaomi could barely survive.

Perhaps the longevity is just someone else's story, and more people just want to ride the market and make short-term speculation, and they have no time to focus on core research and development such as product experience. Therefore, when Apple has launched the powerful A8 quad-core processor, the large Coke mobile phone, which was hyped as the first case of China's Internet crowdfunding mobile phone, was frequently complained by consumers - the screen cracked!

The market will not always stand on the side of speculators. Since 2014, the Chinese smartphone market has slowed down, from the original exponential growth to an annual growth of only about 10%. By 2015 There was even negative growth in the second quarter of this year. Therefore, speculators who fry short-term are quickly caught up and have to enter the next round of knockout. In the survey of mobile phone users' habits conducted by CEConline, 59% of the participants were particularly satisfied with the current mobile phone and said they would continue to buy this brand of mobile phone in the future. It can be seen that in this market, latecomers do not have many opportunities.

Li Wang, the former president of Qiku Technology, once explained the sudden change in the style of the market: After years of development in China's communications industry, operators' subsidies for terminals have decreased, and the frequency of consumers' replacement is also reduced. Li Wang believes that the reduction in market demand and the increase in shipments will definitely bring the domestic smartphone industry into a period of saturation and stagnation.

The embarrassment is no different with upstream suppliers.

Shenzhen Lingxin Optoelectronics, which went bankrupt in October 2015, started out by producing touch screens for mobile phones. In the past, Lingxin Optoelectronics had expanded twice, and before its collapse in 2015, its scale had increased 70 times. An insider revealed to the media that Lingxin Optoelectronics entered the field of fully-fitted mobile phone screens in 2013. At that time, the production details and technology were not connected, but a large number of orders were received. According to the data, more than 600 such factories were newly opened in Shenzhen alone that year.

Wang Yanhui, secretary general of the China Mobile Phone Alliance, pointed out, "At present, both mobile phone brands and mobile phone suppliers in China are in a state of chaos and chaos. Due to the low threshold, many people who are not in the mobile phone industry even They have also entered, like the boss of Fuchang Electronics, who thinks this industry is profitable, so they enter from laymen.” The bubble in the market is already obvious. Once the market suddenly cools down and the bubble bursts, these manufacturers can only face the doomed outcome.

This isn't just a problem for the smartphone industry. In recent years, the term overcapacity has been frequently seen in various media, from traditional industries such as steel and cement to emerging industries such as solar photovoltaic, LED, and smart wear. Low-level repetitive construction brings a lot of waste of resources. When smart bracelets and drones are placed on the mobile phone counter in Huaqiangbei, how many people will see that another industry may repeat the mistakes of the smartphone industry?

Even new concepts like robotics are getting hyped. "Made in China 2025" has just been promulgated, and various manufacturers have begun to compete on this new battlefield. Well-known companies such as Midea and Haier have set foot in it in different ways, and the speed of the emergence of robot industrial parks is like bamboo shoots after a rain. In 2015, four to five robot companies were born every week in my country; in 2014, the figure was two every week.

Although my country has become the world's largest robot market for two consecutive years, the facts are not so optimistic: in 2014, the sales of industrial robots in the Chinese market soared by 54% to 560,000 units, but among them The supplier's sales volume was only 160,000 units, and the rest came from overseas suppliers. The reason why these overseas manufacturers are strong is that most of them have core component research and development and body manufacturing capabilities. On the other hand, most of the domestic robot companies only focus on the system integration link-buy robots, install and debug them according to the needs of the factory to meet the production needs. Such manufacturers cannot support a strong and competitive industry at all.

Although overcapacity is a global problem, due to the wide application of big data and intelligent interconnection, advanced manufacturing countries will use digital technology to achieve point-to-point precision customization. As a result, overcapacity based on information asymmetry is expected to be Mass disappearance - Precise orders are generated based on customer demand, and excess product has no chance of appearing at all.

At that time, where will Chinese manufacturing, which is keen on low-end repetition, look for development opportunities and market space?

Who can escape the whip of a price war?

In August this year, Lenovo announced its first-quarter financial report for fiscal year 2015. The report showed that its mobile business segment suffered a loss of $292 million before tax; and as the pioneer of the popularization of smartphones in China, Xiaomi is not an outsider either. As advertised, some media analyzed a document submitted by Xiaomi to the Shenzhen Stock Exchange and concluded that Xiaomi's gross profit margin in 2013 was only 1.8%, while that of Apple and Samsung were 28.7% and 18.7% respectively.

These two companies were once the main force in the price battle. Four years ago, Xiaomi lowered the price of smartphones to 1,999 yuan, and then its Redmi brand controlled the price range of smartphones to less than 1,000 yuan; in early 2015, Lenovo launched a mobile phone with a price of 599 yuan, which directly Refers to Xiaomi's Redmi series.

Wang Yanhui, Secretary General of the China Mobile Phone Alliance, believes that there are generally two directions for making mobile phones. One is to pursue cost-effectiveness and sell more than others, but this kind of gameplay must correspond to efficient operation, otherwise it may be difficult to earn money. Get money; or pursue product premiums and make your own characteristics, although the price is relatively high, but through personalization to achieve profitability.

Due to the lack of efficient operation, the competitive barriers built by manufacturers with price are as thin as paper - just not long ago, Zhou Hongyi, who acquired Coolpad, set a new record for the lowest price of smartphones - 399 yuan! Xiaomi, known as the price butcher, is being countered by competitors with price.

The price war is like a long whip, and its harm is being transmitted to the entire supply chain. Someone in the mobile phone supply chain revealed that under the crazy price war, in order to obtain nutrients for survival, many mobile phone manufacturers are seeking up and down the supply chain - squeezing suppliers upward and compromising quality to consumers.

In the past year, bad news of suppliers closing down in Dongguan, Shenzhen, Suzhou and other regions where mobile phone OEM companies are concentrated has come one after another. Many analysts believe that the reason is that their technology upgrades are lagging behind. Electronics is mainly engaged in the manufacture of precision plastic molds, providing plastic casings for ZTE and Huawei mobile phones. In the current situation where metal casings are commonly used in mobile phones, its elimination seems to be doomed.

If bystanders can see it clearly, the managers of Fuchang Electronics who are in it must have also imagined "transformation" and "upgrade".

However, it is reported that in July 2014, Fuchang Electronics directly forced the other two bidders out of the competition at a zero-profit supply price in order to obtain orders for Huawei's mobile phone plastic casings. In the cycle of "the more you do, the more you lose", upgrading is out of reach.

Participants in price wars generally use the banner of "giving profits to consumers", but in fact, consumers will eventually suffer the long whip of price wars. The previous exposure of a domestic mobile phone manufacturer's "screen door" and "core door" shows that in the price war, consumers do not actually have a bargain. In the survey of CEConlines, 58% of the participants said that the most important factor when buying a mobile phone is performance, and only 8% are most concerned about price.

Looking at Made in China, almost all fields are filled with the smoke of price wars. In 2014, Gree provoked a price war in the air-conditioning industry. Midea responded by "shopping to the end". Oaks said that it would take the initiative to attack... In the TV industry, established manufacturers will join forces to encircle and suppress latecomers at low prices...

Manufacturers are keen to occupy the market with cost-effectiveness, and financial writer Wu Xiaobo once questioned the "scale wins everything" made in China: In the eyes of many people, only when there is scale can the ecology be achieved, the loop can be closed, and the right to speak. Only with bargaining power can there be a cost advantage. Does this logic sound familiar? Yes, it is exactly the textbook expression of "Made in China = scale + cost". However, isn't this the fate that "Made in China 2025" wants to get rid of? The scale advantage formed by the cost-effectiveness and cost advantages is the most unreliable and the least valuable in the long run!

Manufacturers who are stunned by the vigorous price war should stop and think about Apple, which earns 90% of the profits of the smartphone industry with less than 20% of the market share. In the CEConline's survey, 48% of participants are using an iPhone, which is more than 30% away from the second-ranked mobile phone brand.

How far can a thigh-holding foundry go?

On December 11, 2014, Foxconn announced the closure of its factory in Chennai, India. In 2006, the domestic manufacturing giant followed in the footsteps of its big customer, Nokia, to India. But in recent years, orders from Foxconn's Indian factories have dwindled sharply as Nokia languished until it was acquired by Microsoft. A company spokesman said: "The decision was made based on changes in the factory's customer base and corresponding customer needs.

In the traditional perception, as long as suppliers and foundries can embrace the thighs of giant companies, even if they cannot get rich overnight, at least they can have a good life - so many supply chain manufacturers All wanting to "climb relatives" with Apple is the best proof. However, a large customer can decide the life and death of the foundry, what about the impact of the foundry on the customer?

After Fuchang Electronics collapsed, Huawei responded that the company has urgently switched to other suppliers and will eliminate the impact on product delivery as soon as possible; Shenghua Technology, which was once Apple's main supplier, did not close down. It affects the upgrading of Apple products; the huge loss of Samsung mobile phone suppliers has not affected the launch of Samsung's new products.

Behind such a poignant comparison is a helpless fact: the electronics foundry industry where smartphones are located has experienced decades of development, but most of them are at the low end of the industry chain, with meager profits and complete Depends on a single client. Customers are constantly launching new models, and hardware products are rapidly updating and iterating. In order to cope with price wars, suppliers cannot adjust their production chains according to industry trends, and naturally cannot follow such rapid product upgrades.

The famous IT critic Jia Jinghua once raised such a question: If suppliers at the bottom of the hardware supply chain can lead the development of new technologies, will they be ruthlessly eliminated in the end?

How difficult it is to achieve this goal!

After Fuchang Electronics went bankrupt, although the Longgang District Government came forward and cooperated with several enterprises to reorganize Fuchang Electronics, the relevant parties were not optimistic about the prospect of the reorganization. Perhaps no one can provide a recipe for bringing a failing company back to life, but from this wave of supplier closures and the woes of the smartphone industry as a whole, other industries may find pitfalls that can be avoided.