Chinese smartphone giants are making a high-end play against Apple and Samsung

Chinese smartphone makers are looking to propulsion into the high-end instrumentality marketplace to situation the dominance of Apple and Samsung aft 1 of the worst years for the marketplace connected record.

At Mobile World Congress — the world's biggest mobile amusement — successful Barcelona, Spain past week, Chinese smartphone makers had immoderate of the astir salient stands and displays, caller disconnected the backmost of launching caller products.

Last month, Oppo, the world's fourth-largest smartphone maker, launched its foldable smartphone called the Find N2 Flip which was priced astatine much than $1,000. Its bigger rival Xiaomi followed with the motorboat of its $1,000 positive Xiaomi 13 and Xiaomi 13 Pro.

Honor, a institution spun disconnected from Chinese telecommunications elephantine Huawei, past launched its $1,690 foldable smartphone called the Magic Vs.

These costly smartphones correspond a displacement successful strategy from Chinese companies, which person risen to prominence implicit the years done offering lower-cost devices with flagship-like specs.

"A multitude of companies specified arsenic Oppo, Xiaomi, OnePlus, Vivo, RealMe and others are keen to flex their muscles arsenic they effort to unafraid a spot successful the marketplace alongside Apple and Samsung who progressively predominate income astir the world," Ben Wood, main of probe astatine CCS Insight, told CNBC via email.

That alteration successful tact from Chinese firms comes aft shipments successful the smartphone marketplace past twelvemonth reached their lowest level since 2013. But the stock of high-end smartphones, those priced supra $800, roseate from 11% successful 2020 to 18% successful 2022. Apple and Samsung combined person astir each of that market.

Still, the accidental is lucrative arsenic Chinese vendors look to boost margins.

Unquestionably, Wood said determination is "a propulsion for the premium marketplace which commands higher mean selling prices and margins."

The high-end propulsion besides coincides with China's re-opening aft the state abruptly dropped its strict Covid prevention rules successful December. This has made it easier for executives, who person mostly been stuck successful China since aboriginal 2020, to question abroad.

And it besides coincides with renewed impetus by Chinese firms to grow their planetary reach. In 2022, the marketplace stock of Chinese smartphone makers Realme, Oppo and Xiaomi declined successful Europe, portion Apple and Samsung remained comparatively stable. Chinese companies are hoping to alteration that present that the home system has re-opened.

"The easiness of lockdown is simply a 'reboot' for the companies manufacturing and exporting to planetary customers to conscionable successful idiosyncratic and grow the relationships and concern opportunities," Neil Shah, spouse astatine Counterpoint Research, told CNBC via email.

"So, for the adjacent 12 months we volition proceed to spot a surge of Chinese concern arsenic good arsenic tourists flocking extracurricular of China which volition boost their planetary strategy."

Chinese smartphone makers person yet to ace the premium conception of the market. The objection was Huawei which managed to find occurrence successful the high-end, yet becoming the number 1 smartphone subordinate globally successful 2020, earlier U.S. sanctions crushed its handset business.

Xiaomi, Oppo, Honor and different Chinese challengers look a fig of challenges successful the premium segment, according to analysts.

The archetypal is marque recognition, according to CCS Insight's Wood, who said Chinese firms are spending "eyewatering amounts of money" connected advertizing campaigns to rise awareness.

But the biggest issue, according to Shah, is sustainable profitability.

He said Apple and Samsung are dominating astir of the premium markets specified arsenic the U.S. and Europe. While Chinese brands person besides not been capable to physique profitable bundle and services businesses arsenic Apple has, which yields bigger margins.

"Profitability is the biggest situation arsenic their standard declines due to the fact that the segments they person been targeting (affordable entry-to-mid-tier) has been shrinking," Shah said.