Huawei Phones Sales Crash in China; Steep Drop in Sales, Samsung Considers 30% Layoffs

Summary

The 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.