Innovations in China Mobile Phone Industry

Fast development in the ICT industry makes China a major mobile phone exporter and producer. This has made china grow rapidly to become a major economy which has disrupted the world powers. Multifunctional model development and innovative strategy enhances capability to build competitive products from their rivals. However, for successful innovative business strategies to be applied in the China mobile phone industry, scholarly attention is demanded. This study aims at seeking to determine key innovations and how they create a sustainable competitive advantage within Chinese mobile phone industry. To discover the suggestions by research regarding to innovation strategies, for improvement or sustain the competitive advantages of Chinese mobile phone industry 1. Outline of Each Part Part one evaluates critically an overview of China’s mobile phone. Part two discusses the innovation strategies applied by the Chinese mobile industry to gain competitive advantage.

This is done by undertaking a value chain analysis of the mobile phone industry. The section further looks at the China’s mobile phone ecosystem. The rapid development of Shanzhai handsets brought the progressive growth of China’s mobile communications market and allowed local handset manufacturers to expand to control a considerable market base, compared to leading local brands and global brands. Chinese Academy of Telecommunications Technology (CATT), Siemens AG, and Datang developed TD-SCDMA which marked the end of dependence on Western Technologies such as W-CDMA and CDMA2000 EV/DO. The use of the 3G formats licensed by the Western counties attracted huge costs; thus the development of TD-SCDMA was a relief for the Chinese mobile phone industries (Chen, Zhao & Peng, 2014). Migration from 2G to 3G and smartphones in China made a few home-based brands to become the prominent providers of smartphones, overtaking exceptional global brands (Chen & Wen, 2016).

China’s mobile phone industry has demonstrated distinctive but connected approaches to innovation (Liu & Gao, 2018). Less inhibition on successful firms in the global market produce is shown, with research and development and profound customer understanding of the markets redefining products and business models. Chinese firms are developing "from new resources to new knowledge. The China’s corporate investment is centered on wisdom of how to acquire primary resources in the emerging economies. Quietly behind the scenes, China is buying the market accessibility, penetrating the brands, technology, and human expertise, expected to mount exciting innovations challenges to the incumbent companies from the developed nations (Yip & McKern, 2016). Innovation Strategies and Chinese Mobile Industry Environment Incremental innovations indicate a future radical and disruptive competition in the mobile phone industry. The concept of Value Chain emerged from the idea that continuous improvement of the system design and performance occur if organization observe close coordination and integration of suppliers and customers.

Value chain is the linkage and interaction of the series of activities in which the industry delivers the developed products to the customers (Sun & Grimes, 2016). The Chinese mobile phone industry involves a number of players within the value chain providing combination of the mobile communication and Internet value chain. The Chinese mobile industry has evolved through product development into a set of partnership to offer mobile value. Research and Development In order to offer value to its products, China’s mobile phone firms have invested more resources on research and development. Huawei and Xiaomi have established research centers mainly for product design. Huawei boost of being an original design manufacturer (ODM) which has seen the firm move up the value chain for component manufacturer to self-branded smartphone producer (MartinRoll, 2018). This improve the organizations product value within the market.

Supply Development The basic components of manufacturing capabilities in the Chinese mobile industry include extensive provision of low input costs. The ready supply of resources makes production cost low (Hsieh & Ossa, 2016). The independent technology innovation focus mainly on development of the for the smartphone. The Huawei’s Kirin series chips are studied and developed separately by its subordinate Hisilicon Technologies Co. Ltd (Bui, Michelinakis & Widmer, 2018). Xiaomi’s hardware design is conducted by an internal team while production and assembly are usually outsourced. These collaborative innovations are geared towards maintaining a strong competitive advantage. Genuine competitive advantage of the local players is anchored on after-sales product repairs and warranty-related services. Service, repair and training centers seems to be a major competitive advantage for Chinese mobile phones. As study conducted in India showed that Xiaomi leads in after sales service followed by Samsung and Oppo (Tina, 2018).

These firms have technology centers which provide IT outsourcing and back-office integration skills. Chinese mobile companies have shifted towards consumer-centric innovations by attempting to solves a problem faced by consumers. This strategy ensures that, Chinese use products and services developed use local brands. This opened space for home-grown services such as WeChat, Weibo, Youku, forming an integral part in the Chinese mobile phone experience (Zhang & de Seta, 2018). The current Chinese consumer is very app-centric, and this drives the mobile industry innovations. The app-centric consumer in China makes to have highest smartphone penetration rates in the world (Wang, 2016). However, their fragmented nature, mainly Android supported gadgets offer a possible challenge for hardware companies. The New Ecosystem and Industrial Transformation of Smartphones and Services in China (Chen & Wen, 2013). Chinese Cost innovation The current device prices, easy accessibility, and usability of the mobile phone supports the greater adoption of the smartphone (Guo et al.

The extensive use of low-cost labor, both, makes the Chinese products cheaper than other products from developed nations. Together with discounted stores, China employs these opportunities to build a strong customer loyalty. Research suggests that emerging economies have become important sources for disruptive innovations (Zhang & Gallagher, 2016). Through the introduction of high-speed mobile phones Chinese and global customers have changed the way they live. However, China’s rapid developments have stimulated incremental innovations (Shu et al. Despite driving the digital world with new products; some Chinese companies-especially mobile phone manufacturers are moving from incremental to radical innovations. Wan, Williamson & Yin (2015) found that China has been accused of adopting disruptive technology instead of sustaining technologies within the bottom of the pyramid (BOP) innovations context. Even though disruptive technologies have been considered to leads to substandard product performance, they are usually cost-effective, modest, smaller, and more suitable for use (Cheng et al.

How The Innovation Strategies Bring Competitive Advantages and Productivity to Huawei and Xiaomi in the High-end and Low-end mobile market in China Amid a saturated market in China, higher expectations from consumers are driving innovations and improved phone designs. Company level and the business level in the global smartphone business set in China maintain distinctive features to China. This reflects the unique conditions of market players (Greeven & Wei, 2017). Huawei Innovation Strategies Ren Zhengfei had a dream of a Chinese technology business which would compete predominantly on innovation back in 1987 before the Western people heard of any Chinese company. Ren focused on telecommunication business which has huge opportunities as Chinese largely relied on imported products (Cao, 2017). However, the phone seemed to serve high-end market due to its high-cost performance. Predictions indicated that emphasizing solely on the price competition reduced profits.

Although the strategy yielded low profits, it expanded consumer base and laid foundation future development. Innovation Strategy During the early stages, differentiation focused on appearances which combined parts and design by modifying other brand’s products based on previous research. The firm’s first smartphone portrayed similar functions to the Samsung produced during such period. The failure of Qualcomm processors became an opportunity for Huawei’s Kirin chipsets making them become powerful processors in 2015 (Cao, 2017). Huawei adopted modular innovation strategy to create its chipsets but maintained the original assembly of components, innovating the key parts. Huawei improved its products to low power consumption, low heating and other features which were more advanced compared to other brands. Huawei also maintained its integrated innovations and the incremental innovations of improving technology of other manufacturers.

Huawei pricing strategies changed significantly to profit-oriented pricing during the transformation stage. Xiaomi officially launched its phone in August 2011. “Xiaomi” itself is more than one company consisting of 30 business entities focusing on different business lines controlled by Xiaomi H. K. Limited, which is wholly owned by Xiaomi holding company (Xiaomi, n. d). Xiaomi’s business model could be analyzed based on resource planning, customer proposition, profit model and customer problem solution (Yuan, 2017). Innovation Stream and Product Differentiation Xiaomi has for long advocated for high configurations with low cost of resources. The hardware components are supplied by the first three mobile phone industry giants, including LG screen and Sharp IPS screen. The company uses modest design to preserve a balance between beauty and cost as its products appearance. The company has been successful in marketing and has left a brand image in the customer's mind as the best configuration with the low price mobile phone manufacturer.

The secret to its rapid expansion has been Ecosystem Company strategy (Tse, 2015). All the products Xiaomi produced under the brand, only smartphones, smart TVs, set-top boxes and network routers are designed and manufactured by Xiaomi. The rest products are designed and developed by Xiaomi’s Ecosystem Companies, usually capitalized by Beijing Xiaomi Technology Co. Ltd. Li, 2015). Xiaomi has invested more in research and development which entails strong team focusing on solving customer solution. The hardware design is done an internal team while production and assembly are usually outsourced. Design and manufacture alone take relatively high-end business chain position and low-end position. Mature Stages Xiaomi focuses more on serving the Low-end market. Thorough research and development, Xiaomi has understood the unique needs of customers Xiaomi has grasped the high-end design relations to safeguard the quality and primary technology security while maintaining a strong team which can respond quickly to customer needs.

Indeed, reasonably price rating and attractive features drive the Chinese smartphone customers. The Chinese companies are confined to the domestic market and low-end customers (Yang et al. The rising brands have identified opportunities for growth in the in global emerging economies such as India, and Africa in specific. Coolpad 19 collaborated with Reliance Webstore, a subordinate of Reliance Communications to promote its dual type smartphones within the Indian markets. Coolpad has also collaborated with MetroPCS, American operator to unveil Quattro LTE (Long Term Evolution) 4G mobile phone U. Improving both the hardware and software The application of innovation in mobile phone technology should focus on hardware or software, including optimizing the system, improving performance software, and improving the user experience. Improvement of user experience has remained an important factor than even technological improvement (Yang et al.

Taking full advantage of lead users and care about special need In this era of internet and technology, innovations are deemed as interactive circles but not dominance from developers (Kuang, 2018). Although Chinese mobile phone manufacturers have paid great attention to exploring customer needs, to produces better smartphones, the power and deepness of research need further improvement. Use various social platforms to allow users to completely express their expectations on the next products (Katz, 2017). Some home-based brands such as Huawei and Xiaomi have become the leading smartphone sellers in China’s market, overtaking the once leading companies of Shanzhai phones and a few global premium brands such as Apple and Samsung. Huawei needs to focus on High-end market while Xiaomi should focus on Low-end market. The growth of Chinese home-based products took advantage of the initiation and increasing attractiveness of low-cost smartphones, expanding to become domestically and internationally known companies, in providing inexpensive, middle and high-end smartphones, advancing its territory of good-enough innovations.

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