Smartphone vendors pass rising costs to consumers

Updated 2017-01-20 09:21:12 China Daily
Web celebrities use smartphones to live-stream a running event in Shenyang, Liaoning province.

Web celebrities use smartphones to live-stream a running event in Shenyang, Liaoning province.

Chinese smartphone vendors are ratcheting up the prices of their products, as they wrestle with rising component costs and the mounting pressure to increase profits.

Meizu Technology Co increased the starting price of the Note 5 to 999 yuan (5) at the beginning of this month, an increase of 100 yuan from when it was released in December.

The price tags of handsets by LeEco are 80 yuan to 280 yuan higher this month than their release prices.

Huawei Technologies Co Ltd and Xiaomi Corp also followed the trend, adjusting the prices of their products.

The trend dovetails with local smartphone players' efforts to seek greater opportunities in the high-end market.

But Xiang Ligang, a smartphone expert and CEO of telecom industry website, said the latest price jump was chiefly driven by the rising cost of smartphone components.

"Due to the continuing depreciation of the yuan, the cost of smartphone storage, display and chips have all gone up because the orders are all processed in dollars," he said.

Lu Weibing, president of Gionee Communications Equipment Co Ltd, said in December that the cost of smartphone storage has jumped by 20 percent since the second half of 2016.

Jessie Ding, a Shanghai-based smartphone analyst at consultancy Canalys, said insufficient supply of key parts, such as OLED display, also weighs on the balance sheets of smartphone vendors.

"Most OLED displays are imported from Samsung Electronics Co Ltd. It is difficult for domestic companies to mass-produce high-end parts in the short term," Ding said.

But, the price surge won't damp consumers' willingness to upgrade their handsets.

"The Chinese market is shifting to replacement users. They are willing to pay more for a better gadget but are pickier on design and services," she added.

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