Huawei Phones Sales Crash in China; Steep Drop in Sales, Samsung Considers 30% Layoffs
Summary
TLDRThe video script discusses the significant decline in Huawei's smartphone sales, with once high-demand models like the Mate 60 Pro experiencing a drastic drop in value. It also touches on the broader economic challenges in China, including a 32.9% plunge in the domestic smartphone market and Samsung's market share and production cuts. The script further explores China's economic downturn, with deflationary pressures, high unemployment, and the real estate market's persistent slump. It concludes with commentary on the Chinese government's economic policies and their impact on the country's economic outlook.
Takeaways
- 📉 Huawei's smartphone sales have significantly declined since April, with even flagship models like the Mate 60 Pro experiencing a sharp drop in market price.
- 📱 The value depreciation of Huawei phones is rapid, leading to a 'buy high, sell low' scenario, which is affecting consumer purchasing decisions.
- 🏢 Samsung, a major player in China's smartphone market, has seen its market share and sales drop, leading to facility closures and layoffs.
- 📊 China's domestic smartphone market has experienced a 32.9% decline, affecting not only high-end brands but also budget-friendly options.
- 💰 Economic factors such as tightening budgets and reduced consumer spending are contributing to the poor sales of smartphones in China.
- 🌐 The economic downturn is not limited to smartphones; it extends to other sectors like real estate, liquor, and consumer goods, indicating a broader market issue.
- 📈 Despite being recognized as socially responsible, foreign companies like Samsung and others are underreported in Chinese media, which could impact their market presence.
- 📉 The Chinese white liquor sector, including renowned brands like Lu Lao Jiao, is facing a significant slowdown in sales, with stock prices and market demand dropping.
- 💼 Layoffs and business adjustments in companies like Samsung are attributed to increased competition and a weak domestic demand, signaling a challenging economic environment.
- 🌐 China's economic challenges are multifaceted, with deflationary pressures, high unemployment, and trade tensions contributing to a prolonged economic downturn.
Q & A
Why are Huawei phones not selling as well as before?
-Huawei phones are struggling to sell due to various factors, including a sharp drop in demand for smartphones in China, economic downturns, and tightening consumer budgets. Even with significant price reductions, Huawei phones, which were previously marketed with patriotic appeal, are now facing challenges in attracting buyers.
How has the price of the Huawei Mate 60 Pro changed over time?
-The market price of the Huawei Mate 60 Pro has plummeted significantly. Within just over a month, the value of the phone has dropped by 1,000 to 2,000 yen, reflecting the larger market challenges Huawei is facing.
What are some reasons consumers prefer Apple phones over Huawei?
-Consumers prefer Apple phones because Huawei phones are perceived to lose value faster. There is also a perception that Apple products maintain their value better, making them more appealing for long-term investment.
How has the overall Chinese smartphone market been performing in 2024?
-The Chinese smartphone market has plunged by 32.9% in 2024. This drop affects both high-end brands like Apple and Samsung, as well as budget-friendly options like Xiaomi. The economic downturn and tighter consumer budgets have reduced the demand for smartphones across the board.
Why did Samsung lay off employees in China despite leading global smartphone shipments?
-Samsung's layoffs in China are due to intensified competition from domestic brands, weak domestic demand, and an economic downturn. While Samsung still leads globally in smartphone shipments, the company's sales in China have declined, prompting significant restructuring and layoffs.
What impact has the economic downturn had on foreign companies like Samsung in China?
-The economic downturn in China has led foreign companies like Samsung to reduce operations and lay off employees. Samsung has closed several production facilities and continues to adjust its business due to weakening domestic demand and competition from local brands.
How is deflation affecting consumer spending in China?
-Deflation is causing consumers to cut back on non-essential spending, including smartphones. Rising prices for essentials like food, driven by adverse weather, are leaving consumers with less disposable income to spend on luxury goods, contributing to the decline in smartphone sales.
What challenges are faced by other high-end industries in China, such as white wine producers?
-Like the smartphone market, China's high-end industries, including white wine producers, are facing a significant decline in demand. Luxury liquor brands like Luo Lao Jiao and Moutai have seen sharp price drops as consumers cut back on spending, resulting in a challenging market for premium products.
Why are foreign companies in China receiving little recognition for their contributions to the economy?
-Despite contributing significantly through job creation and taxes, foreign companies like Samsung and Tesla receive little positive coverage in Chinese media. This lack of recognition reflects a broader trend where media outlets often avoid reporting on foreign enterprises' achievements.
What long-term risks does China's economic deflation pose according to economists?
-Economists warn that China's ongoing deflation could lead to a spiral of falling prices and wages, reducing consumer spending and investment, which could further slow economic growth. Prolonged deflation risks triggering widespread business bankruptcies and higher unemployment, worsening the economic situation.
Outlines
📉 Decline in Huawei Smartphone Sales
The script discusses the significant drop in Huawei's smartphone sales, particularly after April of this year. Despite the patriotic appeal and previous high demand for their foldable phones priced over 7,000 yen, sales have plummeted. The Nova Pro, once in high demand, has seen its price drop to over 4,000 yen with no significant sales boost. The owner of a Huawei flagship store notes the rapid depreciation of Huawei phones and the public's preference for Apple phones. The script also mentions the drastic reduction in the market price of the Huawei Mate 60 Pro, which has fallen by 1,000 to 2,000 yen in just over a month. This trend is not isolated to Huawei, as the entire domestic smartphone market in China has seen a 32.9% decline, with consumers tightening their budgets and showing reluctance to spend on smartphones.
🛠️ Samsung's Layoffs and Market Challenges in China
The script highlights Samsung's struggles in the Chinese market, with plans for layoffs and business adjustments due to intensified competition and an economic downturn. Despite being recognized as a socially responsible enterprise in China, Samsung's mobile business has been impacted, leading to a reduction in its workforce. The company's sales department is expected to face a 30% staff reduction by 2025. The script also discusses the broader trend of foreign companies leaving China and the lack of media coverage for their positive contributions. Economic indicators such as the Consumer Price Index (CPI) and sales data for moon cakes and white wine reflect the weak demand in the Chinese market, suggesting that the economic downturn is affecting various industries.
📉 China's Economic Downturn and Deflation Risks
The script delves into China's economic challenges, including a significant slowdown in the white liquor sector, with brands like Lu Lao Jiao and Moutai experiencing price drops and production decreases. The mid-autumn festival, typically a boost for liquor sales, has seen no significant increase in demand or prices. Analysts attribute this to insufficient purchasing power and an oversupply of premium liquors. The script also discusses the broader economic issues, such as deflationary pressures, prolonged weakness in the real estate market, high unemployment, and escalating trade tensions. International attention has been drawn to China's economic situation, with core inflation rates remaining below 1% for 18 consecutive months. Experts warn of the potential for a deflationary spiral and call for aggressive policy measures to address the economic downturn.
🏛️ China's Economic Policy and Market Response
The final paragraph discusses the Chinese government's economic policies and their effectiveness in addressing the economic downturn. The People's Bank of China has taken measures such as lowering the required reserve ratio, but critics argue that these actions are more psychological reassurance than substantive solutions. The script points out that the Chinese Communist Party's stimulus measures have not addressed the root causes of the economic issues, such as authoritarian politics, corruption, and loss of public confidence. The economic outlook continues to worsen, with deflation expectations leading to a rebound in bonds and concerns over banks' exposure to interest rate risks. The script concludes with a warning from experts that China may need more significant stimulus measures to break the cycle of debt deflation.
Mindmap
Keywords
💡Huawei
💡Smartphone Sales
💡Patriotic Appeal
💡Kirin Chip
💡Depreciation
💡Market Saturation
💡Economic Downturn
💡Consumer Spending
💡Deflation
💡HarmonyOS
Highlights
Huawei phones, once in high demand, are now struggling to sell despite having competitive features like Kirin chips.
The Huawei Nova Pro, which previously sold well at over 7,000 yen, has seen a significant price drop to over 4,000 yen but still faces poor sales.
Smartphone sales have plummeted since April, with even patriotically marketed Huawei phones failing to sell.
Huawei phones are losing value quickly, leading to a 'buy high, sell low' situation in the market.
The market price for the Huawei Mate 60 Pro has plummeted by 1,000 to 2,000 yen in just over a month.
The Huawei P50 Ultra's price has also seen a steep decline, originally priced at 99,999 yen and now significantly reduced.
The domestic smartphone market in China has seen a 32.9% drop, affecting brands like Apple, Samsung, and Xiaomi.
Chinese consumers are tightening budgets and are reluctant to spend on smartphones, leading to unsold models.
Samsung, once the largest Android smartphone supplier in China, has seen a significant drop in market share from 20% to 19%.
Samsung has closed several production facilities in China and is considering further layoffs and business adjustments.
Samsung's layoffs in China are attributed to intensified competition and an economic downturn.
China's Consumer Price Index (CPI) in August grew by 0.6% year-on-year, indicating weak domestic demand.
The moon cake market in China has shown a concerning trend, with consumers cutting back on spending.
Luo Lao Jiao, a renowned Chinese liquor brand, has experienced a significant slowdown in performance and a drop in stock price.
The Chinese white wine sector is in decline, with top-tier liquors not experiencing the usual price hikes or demand surges.
China's economy has struggled to gain momentum in the second half of the year, with deflationary pressures becoming more entrenched.
China's core inflation rate has stayed below 1% for 18 consecutive months, indicating a persistent economic downturn.
The Chinese government's stimulus measures have failed to address the root cause of the economic downturn.
Transcripts
why are Huawei phones not selling now
previously when the foldable phone was
priced over 7,000 yen it was in high
demand take a look at this phone the
sleek and attractive Nova Pro which is
now dropped to over 4,000 un and
features a Kieran chip why is it not
selling this is an observation from the
owner of a Huawei flagship store since
April of this year smartphone sales have
plummeted drastically and even Huawei
phones which were previously marketed
with a patriotic appeal are now
struggling to
sell the situation looks bad earlier
this year before April we couldn't even
get phones priced over
7,000 now even at 5,500 they're not
selling I'm really confused about what
went wrong it's clear now why people
prefer Apple phones Huawei phones lose
value fast I finally understand what it
means to buy high and sell low phone
prices go up with demand but when prices
drop no one wants
kind of like what's happening in real
estate basically if you have Huawei
phones that are losing value sell them
quickly on July 14 the secondhand phone
dealer and blogger free Mine Tech Yen
mentioned that huawei's situation has
deteriorated significantly recently with
the mate 60 Pros market price plummeting
severely he recently reported on social
media that Huawei is facing significant
Market challenges particularly with a
Huawei mate 60 Pro the the value of this
model has dropped by 1,000 to 2,000 in
just over a month once highly sought
after at the end of last year with
prices even exceeding market value the
current situation paints a starkly
different picture now it seems there's
little Demand with recycling prices
falling from around 6,000 yen to just
over 4,000 unen this downward trend is
consistent across all Huawei brands with
prices depreciating rapidly over the
past couple of months another tech
blogger highlighted that the price of
the Huawei Pura 70 Ultra is also on the
Steep decline originally priced at
99,999 a figure that many found
excessive it has since dropped
considerably the speed and magnitude of
huawei's price reductions have outpaced
those of other top tier Flagship phones
in fact Huawei situation is not an
isolated case recent data reveals that
the domestic smartphone market has
plunged by
32.9% whether it's high-end Brands like
Apple and Samsung or budget friendly
options like xiaomi phones across the
board are struggling to sell in China
currently fewer Chinese consumers are
willing to spend on smartphones due to
tightening budgets this reluctance to
spend has led to unsold Huawei mate 60
and Apple iPhone 15 models forcing them
to cut prices this phenomenon was
unprecedented in the past during
pre-sale of Apple iPhone 14 consumers
eagerly awaited and often had to wait
months for a popular model however with
the release of the Huawei mate 60 and
Apple iPhone 15 even though consumers
are interested they're not willing to
pay contributing to a cold spell in the
smartphone industry in
2024 the ongoing downturn in the
smartphone market has now extended to
South Korea Samsung a major player in
the Chinese market in 2013 Samsung was
the largest Android smartphone supplier
in China with its market share peaking
at 20 % however since 2018 the company's
sales in China have been on a decline
due to the country's economic downturn
and weak domestic demand although recent
reports indicate that Samsung still
holds the top spot in China's smartphone
market with a 19% share this is a
significant drop compared to its Peak
Performance in recent years Samsung has
closed several production facilities in
China including smartphone and computer
factories relocating operations to
countries like India and Vietnam this
shift resulted in significant layoffs
affecting China's economy despite these
changes Samsung has not completely
exited the Chinese market and continues
to operate some business
activities however in late August
Samsung announced further plans for
layoffs and business adjustments
signaling ongoing challenges for the
company in
China Samsung is starting to lay off
employees again which isn't a positive
sign at its ke Samsung had over 60,000
employees in China but now that number
is down to fewer than 20,000 if their
smartphone business is struggling it's
noteworthy that Samsung still leads
globally in smartphone shipments this
year so why the layoffs in China is it
due to the sluggish Market is Samsung
considering exiting the Chinese market
according to a September 4th report by
the so economic daily Samsung
Electronics plans to cut 8% of its
Chinese sales department staff about 130
people the layoffs are attributed to
intensified competition and economic
downturn which have weakened domestic
demand and made the company's future in
China more uncertain the company is
implementing extreme restructuring
measures to ensure
survival however some online
commentators suggest there might be
other reasons behind these layoffs one
commentator
mentioned analyzing the reasons for
Samsung's layoffs reveal is a deeper
warning firstly it's argued that Samsung
survival is challenged by Fierce
competition from Chinese domestic Brands
leading to poor sales the data shows
that Samsung's overall industry sales
are on an upward Trend as a conglomerate
Samsung is not solely dependent on its
mobile business so despite the impact on
its smartphone division it won't face
severe issues Samsung sales in China
have consistently ranked among the top
making it an exaggeration to claim they
are outperformed by domestic Brands
another aspect is China's environment
Samsung is annually recognized as the
most socially responsible foreign
Enterprise in China yet this is rarely
reported in the media this lack of
coverage reflects a broader Trend in
Chinese media which often avoids
positive stories about foreign companies
including Tesla and
BMW despite building numerous factories
creating jobs and contributing taxes
foreign companies of received little
credit with China's economic downturn
it's expected that the trend of foreign
companies gradually leaving China will
become more
frequent currently industry sources
suggest that Samsung Electronics China
has issued restructuring notices to
sales department employees and is
accepting voluntary resignation
applications essentially signaling that
layoffs are imminent an Insider from
Samsung revealed to the media that this
round of layoffs is just the beginning
with an ant anticipated reduction of up
to 30% by next year the primary reason
Remains the poor sales of Samsung
products in China such as smart TVs and
phones Samsung China responded that the
layoffs are part of necessary business
adjustments and Personnel optimization
to improve organizational efficiency and
Market competitiveness the company
confirmed the speculation that it plans
to reduce its sales department staff in
China by 30% by
2025 for many Samsung employees this
news is shocking but given the current
economic conditions in China it was
somewhat
anticipated according to data released
by The National Bureau of Statistics on
September 9th China's Consumer Price
Index CPI in August grew by 0.6% year
on-ear slightly below the 0.7% forecast
by reuter's analysts the increase was
primarily driven by adverse weather
pushing up food prices which forced
consumers to spend more on Essentials
rather than on Revival in domestic
demand excluding volatile food and
energy costs the core Consumer Price
Index Rose by only
0.33% the lowest level since March 2021
indicating that overall demand in the
Chinese market remains weak in fact
recent sales data of moon cakes in the
Chinese market reveals a concerning
Trend traditionally during the festive
season in China consumers would buy moon
cakes in large quantities driven by the
festive atmosphere however the moon cake
Market has recently shown an unusual
pattern a business owner who sells
mid-autumn Festival gift boxes
said this year has been the toughest in
the past 5 years I'm not sure if other
business owners feel the same let's look
at it from the customers perspective for
instance people who bought moon cakes
last year or in previous years may not
need them this year or they've cut back
on spending larger clients tend to show
this shift more than smaller clients
corporate customers like hospitals
training institutions 4S shops insurance
companies and real estate firms
typically buy moon cakes but this year
some aren't planning to give mid- Autumn
gifts at all While others are still
giving moon cakes but deducting the cost
from employees paychecks so a 100 yen
gift box from last year is now being
replaced with one worth just 35 to 40
Yen similarly the white wine market is
also facing a sharp decline luo laao a
renowned Chinese liquor brand known for
its guiao 1537 liquor hailed as a living
cultural Relic and a standard gray
Chinese liquor however it too is
experiencing significant sales issues
this year the company became the worst
performer among white wine producers
according to reports from September 8th
luo Leo jao's stock price has dropped
over 36% far surpassing the declines of
other liquor companies such as mulai
Wulan
ifu on September 5th its stock price hit
a new low for the year with its market
value plummeting from over 450 billion
un 3 years ago to around 160 billion un
now the primary reason for this drastic
drop is a significant slowdown in
performance it's not just luo Lao Jiao
the entire Chinese white wine sector is
in Decline mulai China's leading white
liquor brand is also seeing a price drop
as of September 5th the wholesale price
of a bottle of fettia M Thai is 2,610
Yen down 10 Yen from the previous day
typically the approach of the mid-autumn
festival boosts traditional white liquor
sales however this year the market for
top tier Liquors including various
multiproducts has not experienced the
usual price hikes or demand surges
instead prices have been fluctuating
recently with no significant Rebound in
market demand one distributor commented
that this year's mid-autumn Market is
experiencing the coldest liquor prices
in the past decade several industry
analysts believe that the main issue for
the white wine sector is insufficient
purchasing power as the supply of
Premium liquers increases their scarcity
decreases and if demand growth lags
price pressures will continue to rise
the real Market consumption has dropped
even more sharply than production
according to financial news in 20 23 the
white wine production capacity was 6.3
million tons only 46% of that in
2016 from 2019 to 2023 China's white
wine production capacity decreased by
about 20% meanwhile the total inventory
of 20 listed white wine companies on the
aare market reached 133 billion un and
149 billion in 2022 and 2023
respectively compared to just 91 billion
Y in
2019 a Chinese commentator noted that
this situation is quite normal as these
high-end liquor Brands aren't typically
consumed by the average person when
ordinary people buy this liquor it's
more for the status symbol than for
drinking despite heavy promotion sales
are bound to decline because any bottle
priced under 500 Y is bound to give you
a headache most regular consumers prefer
cheaper bulk liquor which they believe
is better than these expensive Brands
given this the commentator questioned
how these Brands could expect their
sales to
increase Michelle Lamb a greater China
Economist as Society General believes
that deflationary pressures on China are
becoming more entrenched which could
lead to a spiral of falling prices and
wages she warns that more aggressive
policy measures are needed to address
the situation despite attempts by the
Chinese authorities to obscure the full
extent of the economic downturn official
data still paints a bleak picture with
prolonged weakness in the real estate
market high unemployment mounting local
debt and escalating trade tensions
China's economy has struggled to gain
momentum in the second half of the year
the sharp decline across various
Industries has attracted significant
International attention in August
China's core inflation rate increased by
just
0.3% marking the 18th consecutive month
that inflation has stayed below 1%
Bloomberg noted the surprising speed at
which China's price Outlook is
deteriorating
Bloomberg forecast that due to weak
wages and demand the price decline in
China is expected to continue into
2025 analysts at BMP parabus Echo this
sentiment predicting that China's GDP
deflator an important measure of
economic price changes will continue its
downward Trend into
2025 this could Mark the longest period
of deflation since China began recording
data in 1993 the GDP deflator is a
broader economic price measure and using
the this data provides a clearer picture
of China's economic
situation the persistent downturn in
China's real estate sector now in its
third year has stifled domestic demand
while intense competition in
manufacturing has driven prices down
even further despite efforts by Chinese
officials to suppress discussions about
deflation and warnings to analysts to
avoid using such data the issue has
entered public
discourse former Chinese Central Bank
Governor y gang acknowledged the growing
threat of deflation on September 6
stating that eradicating it should be a
top priority for policy makers this rare
admission highlights the seriousness of
falling prices on China's economic
Outlook and ye stressed the need for
Urgent action to alleviate deflationary
pressures similarly Morgan Stanley's
Chief China Economist Robin Shing
highlighted the severity of China's
economic deflation stating we are
definitely in deflation and probably
going through the second stage of
deflation experience from Japan suggests
that the longer deflation drags on the
more stimulus China will eventually need
to break the debt deflation challenge
China now faces the risk that deflation
could snowball with wages declining
households are cutting back on spending
and delaying purchases in anticipation
for further price drops this reduces
business Revenue dampens investment and
leads to more layoffs eventually causing
bankruptcies among both families and
companies surveys show that this
situation is already unfolding according
to an August survey by kaien Insight
group in business Big Data primary wages
in favored economic sectors such as
electric vehicle manufacturing and
renewable energy have fallen by nearly
10% from their peak in
2022 a survey by the Chun Kong Graduate
School of Business also found that labor
cost growth last month was the weakest
since April
2020 deflation expectations are
spreading in the market leading to a
rebound in bonds which has pushed yields
to record lows and highlighted concerns
over Banks being overly exposed to
interest rate risks to stimulate the
market The People's Bank of China has
lowered the required Reserve ratio
multiple times and has proposed further
reductions its monetary policy
Department director Zan believes that
the effects of earlier reductions are
still showing with the average deposit
Reserve ratio at about 7% indicating
further room for cuts however American
Economist Dave Wong disagrees he
believes that with a reserve ratio
already at 7% and historically low at 8%
or above future reductions will be
limited Wong argues that this measure
will not resolve China's current
economic problems and considers the
official stance as merely a placebo as
China's economy continues to decline in
numerous businesses go bankrupt the
decreasing value of real estate often
used as primary collateral has resulted
in Surge of bad loans and non-performing
assets with deposit Reserve ratios
reaching low levels many banks are now
at risk not only of bankruptcy but also
of being unable to redeem deposits
highlighting systemic risks consequently
the central banks actions are viewed
more as psychological reassurance than
as meaningful solutions to the
underlying economic problems critics
argue that the Chinese Communist Party
stimulus measures have failed to address
the root cause of the economic downturn
the Govern government's focus on
investment has increased fiscal burdens
and worsened overcapacity meanwhile the
CCP has avoided confronting the deeper
issues such as authoritarian politics
stifling market growth widespread
corruption and the loss of public
confidence in the government observers
believe that the party's reluctance to
use its wealth to support the economy
and its disregard for long-term economic
health are key reasons why China's
economic Outlook continues to worsen
[Music]
Weitere ähnliche Videos ansehen
How China’s Deflation Threatens the Global Economy | WSJ
The Middle Class is about to get DESTROYED.
L'INIZIO del CROLLO dei Mercati: è il Colpo di Grazia (FED+Blackout) ?
Housing prices plummet and mortgage payments are cut off, with serious consequences.
China's Youth Threatens CCP's Rules
How Xi Jinping’s authoritarianism is killing China’s economy | Business Beyond
5.0 / 5 (0 votes)