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The Year Ahead

The Cheap Phone Is Dead in China

Local iPhone and Galaxy killers have become the leaders in the world’s biggest market. Now they’re working on fresh targets elsewhere.
Illustration: Simon Abranowicz

Over the past couple of years, China’s top smartphone makers have become 7 of the biggest 10 on earth, and that’s not just a function of Chinese consumers’ loyalty to local brands. The country’s most successful manufacturers have shifted away from cheap me-too models to compete more seriously for the high end of the market. Huawei, Oppo, and Vivo all make phones that stack up well against most iPhones and Galaxies, and together they ship 40 percent of the world’s phones in the $500-and-up category that Apple and Samsung dominate.

The average sales price for those leading three Chinese brands has risen above $300, says Jessie Ding, an analyst in Shanghai with market research company Canalys. “People want more premium phones,” she says. “People are now thinking about good quality and service instead of just low prices.” That’s one reason Beijing-based Xiaomi, which made a splash in 2014 and 2015 selling inexpensive devices, has faded; its average phone sales price is about $180.