China Phone

Is China’s Mobile Industry Flying High or Heading Toward a Crash

September 27, 2013 - Written By Cory McNutt

China is the new hotbed for mobile devices, with four out the ten top smartphone companies like Lenovo, Huawei, ZTE, and Coolpad/Yulong already established, while many new upstart companies like Xiaomi and Oppo are joining the already crowded field. One would think, that within a couple years we will have a mobile world dominated by the Chinese; but not so according to ZTE’s Executive Vice President He Shiyou, who believes the industry may be heading for a crash within three years.

He says that the Chinese carriers heavily promote their own Chinese made devices and by doing so may cause the over-manufacturing of their products and this could cause a huge inventory of devices as oversaturation of their domestic market takes place. He Shiyou compares it to China’s once booming photovoltaic business that even had strong government support. China’s solar panel industry grew very fast for a few years and even became a global player, before it crashed after it produced far more materials than they could sell and many companies went bankrupt.  He Shiyou believes the mobile communications industry is headed down the same path and could suffer the same fate.

He Shiyou

He Shiyou believes the only way to avoid this disaster is get out of the low-end mobile phone industry in China and to reach out globally and concentrate on selling high-end smartphones to the countries that can afford them – which would include the U.S..  ZTE is not too well known in the U.S., but they, LG, and Huawei are in a constant battle for third place behind Samsung and second place Apple as the largest mobile phone manufacturer.  They are slowly working their way into the U.S. with their Nubia Z5 passing through FCC, as He Shiyou works his plan.

Front shoot Z5

Good, healthy business dictates there be a delicate balance between manufacturing production and sells – it all goes back to the old supply and demand, and if any side of that equation gets lopsided, it can spell disaster. He Shiyu believes that China needs to make sure that the domestic and global markets can absorb their manufactured mobile devices; and there will be casualties, there always are. In business, as in life, the Yin and the Yang must always be in balance.