Thai smartphone users ditching Chinese firm Huawei as US China trade war opens up in tech
There has been a drop in sales not only for Huawei as sales of smartphones in Thailand are now expected to decline by 4% this year despite a positive start. Thai consumers are increasingly looking for value for money from smartphones as the lack of new technology means the devices have become an essential life tool as opposed to fashion accessory. The consumer in Thailand will soon be seeking a device with a lifespan of up 36 months whereas previously this was 18 to 24 months before the decline and fall off in sales of Apple’s iPhone began to impact.
Thailand’s smartphone industry is signalling change with a red light for future sales growth and a sharp decline in the sales of smartphones from the Chinese manufacturer Huawei. The US China trade war has opened up another dimension in the tech world. Thai consumers, for now, are keeping faith with US technology and software.
These are the same consumers who at the start of the year, were surging to buy Huawei’s popular P30 smartphone.
Many are now deserting the Chinese flagship brand including those seeking exchanges for smartphones already purchased at the beginning of the year. Increasingly demanding Thai consumers are also looking for a longer lifespan on models as existing technology is bedded into lifestyles after a sharp decline has also occurred in sales of Apple’s iPhone models.
At the Bangkok Mobile Expo 2019 which wound down on June 2nd, the Head of Partnerships and Hybrid Channels for Thailand DTAC which aims to move from Number three to number two in Thailand on strong sales growth, gave a summary of the smartphone market. Arkapong Linpisarn predicted that sales are expected to drop by 4% this year as Apple iPhone sales have been in decline since 2018. He also confirmed, like other industry insiders, that sales of Huawei smartphones have dipped significantly this year on the back of difficulties with US market and software access.
This is despite the Chinese firm having a good first quarter with the strong new P30 model. Since the announcement from Google that it was restricting access of its Android platform to future Huawei products, there has been a sharp fall off in demand and even moves by many Thai consumers to switch models already purchased. It is the latest disruption in the US China trade war as it now threatens to open up a technological divide.
Chinese smartphone maker Huawei Technologies is fighting hard to maintain its market share as Thai consumers become increasingly nervous about buying the Chinese made phones.
The US government has blacklisted the company in the United States on security grounds and these measures have prompted Google to suspend the availability of their popular Android system to the the Chinese tech giant on future models.
Smartphone sales to fall in Thailand this year
The news comes as Thailand is forecast to see a projected decline in smartphone sales in 2019 for the first time by as much as 4% or 17 million units. It will still be a vast market with annual sales at over ฿100 billion but it is a sign that there has been a significant change in market conditions.
Market has reached its peak as Thai consumer now insist on longer lifespans for phones
The reasons for the decline in smartphone sales are simply that the market has been fulfilled with a wide range of smartphone competitors. Many industry experts are also predicting that consumers in Thailand are increasingly looking for a longer lifespan for their phones. Part of the reason for this is a decline in sales of Apple iPhones which has been noted by industry observers since the second half of 2018. Thai consumers are now looking for better value for money as well as performance in smartphone technology which has now been bedded into lifestyles with no new noticeable features or technological developments in recent years. It is estimated that the lifespan of a smartphone for a typical Thai consumer may extend to 36 months whereas previously it as 18 to 24 months.
Chinese firm Huawei runs into crisis of confidence as its smartphone sales drop suddenly
Another key reason for the decline in smartphone sales is continuing uncertainty about the Chinese brand Huawei which is also now extending over onto other Chinese made products. In Thailand, the decline in Apple iPhone sales is increasingly leaving the Android platform as the dominant player. Consumers are concerned that their smartphones will continue to have access to the US dominated software environment. The widening US China trade war and divide is now seen to be extending itself into technology.
Huge mobile technology show in Bangkok ends
On June 2nd, a huge tech show show casing mobile technology wrapped up. Hosted at the Bangkok International Trade and Exhibition Centre in Bangna, the Thailand Mobile Expo 2019 gave a fascinating insight into what is currently happening in the Thai mobile tech industry.
The exhibition was organized by Thai company M Vision Plc. The show was partnered by Thailand’s second largest mobile phone company AIS and is held every three years. This was the largest exhibition ever with over 27,000 square metres of exhibition space. The event had a forecast to generate up to ฿3 billion in sales.
Strong first quarter for smartphones sales in Thailand including Huawei’s P30 model
The decline in smartphone sales for the year is expected but the first quarter of 2019 still saw over 3 million smartphones sold. Among the most popular smartphone models for the first quarter were the Samsung’s Galaxy S10 and the Huawei P30 models.
At the mobile technology event, an augmented sales force of Huawei personnel was on hand to assure nervous consumers that Huawei was in the Thai market to stay. The company’s staff handed out a Thai language statement assuring its customers that it stood by its products assuring them of continued access to all functionality currently available. It was also in the process of developing its own technology for future models if required to do so.
US moves have damaged Chinese company’s prospects in Thailand just as it began to surge.
Most industry insiders accept that the move by the US authorities and in particular Google, has damaged the Chinese company’s prospects and lead to a sharp drop in sales for Huawei smartphones as well as its future prospects. It came at a time, ironically, when the Chinese company was on the verge of becoming one of the biggest players in the Thai smartphone sector. Last year, it saw a rise in sales of over 74% for its products in Thailand.
One Thai consumer happy to buy a Huawei smartphone at Bangkok mobile expo
A reporter from the Bangkok Post, Thailand’s leading English language newspaper, was at the event and spoke to two potential Huawei customers. Kiathanaphat Boriboon visited the exhibition to buy a Huawei P30 smartphone, a breakthrough product for the firm in the first three months of 2019. He expressed himself confident and at ease that the Chinese tech giant would take care of its customers. ‘Personally I think Huawei will find solutions for their users. They will not leave the users with problems,’ he told the newspaper reporter.
Competition in Thailand’s mobile phone market
The show also gave observers an insight into competition between mobile phone companies in the ever more competitive Thai market. It saw DTAC, one of Thailand’s leading mobile phone service operators, hopeful of growing its customer base from 6.2 million up to 7 million users.
This was confirmed by Arkapong Linpisarn who is the Head of Partnerships and Hybrid Channels for the country’s third largest operator right now. DTAC is owned by the Norwegian telecommunications giant Telenor. The company is aiming to move into second place in the Thai market this year. The current market leader is True but mobile phone sales suggest that True has lagged behind it’s two main competitors in the first quarter in adding new connections.
DTAC is expected to have added 120,000 new customers while the second placed company, AIS has added a whopping 200,000 users.
DTAC executive summarises the Thai mobile tech market right now including fall in iPhone sales
The DTAC executive gave a concise summary of the mobile phone market in Thailand right now when he told the Bangkok Post: ‘Bundling data packages with devices will be a continued strategy to boost new users, and this makes DTAC still grow in terms of device sales by at least single digits in contrast to the overall industry, which is expected to contract 4% in terms of value and unit sales in 2019 as Apple’s iPhones have also seen a drop in sales since the fourth quarter of 2018.’
Sharp drop in Huawei smartphone sales
Significantly, Mr Linpisarn confirmed that DTAC had seen a sharp drop in demand for Huawei smartphones after the latest developments. He also described the mood among Thai consumers as one of ‘panic’ in relation to the smartphone maker. A distributor for Huawei phones at the show, Suthida Mongkolsuthree, who the Chief Executive Officer at Synnex, also confirmed the decline in sales for the brand which at the beginning of the year was charging behind an upward momentum. A spokesperson for Huawei declined to comment to the media when contacted about sales of their smartphones in Thailand.
Consumers simply lack confidence in Huawei under current conditions after Google call
One consumer at the expo confirmed the mood out there. ‘I’m worried that the old phone won’t be able to get updates because of what happened with Huawei.’ Theerapong Jitjareonmanee is an existing Huawei user who is considering switching from Huawei for his next smartphone. There also reports of a strong demand from consumers to exchange or hand back their Huawei products purchased recently for other models.
Thai tech company offering Thai customers a 10% switch option to another brand
Narathip Wirunechatapant, the Head of Marketing of Jaymart Plc explained that his company was offering a switch service for existing customers on the basis of a 10% fee or charge. He confirmed both that Huawei’s sales are dropping and that customers are seeking to switch. However, the overall smartphone market has also become more competitive. At the exhibition, while Huawei was discounting its prices by up to 20%, Samsung was also offering ฿5,000 vouchers to boost sales.
New growth area in gaming smartphones and technology may be a sign of things to come
One of the emerging growth areas is gaming smartphones and other devices. These include expensive smartphones which Thai consumers use as second device especially for gaming online in addition to a range of high spec notebooks and old fashioned PCs which are coming back into vogue in this market where power and spec is everything. Some gaming PCs are retailing for up to ฿100,000. The exhibition featured a growing range of these products in addition to accessories. Up to 30% of the ฿3 billion spent during the exhibition was outlaid on such products. Another sign of which direction Thai society, as well as the world over, may be headed in the not too distant future.