According to sources familiar with the matter within Xiaomi, as cited by Chinese media outlet Jiemian News, the Xiaomi electric vehicle that has been spotted multiple times on the roads has finalized its battery supplier list. Both selected suppliers are Chinese companies. The primary battery supplier is set to be CALB, while the secondary supplier is the well-known CATL.

Reports indicate that Xiaomi initially planned to have CATL as the primary supplier, but there was a change of plan. This change could be attributed to the conclusion of patent disputes between CATL and CALB regarding lithium-ion batteries, cathode electrode sheets, and battery-related patents. The National Intellectual Property Administration invalidated the two aforementioned patents held by CATL, allowing CALB to re-enter the market with competitive pricing against CATL.

The report mentions that Xiaomi’s initial electric vehicle production volume is relatively low, which limits its bargaining power. The cost per battery pack starts at 80,000 RMB, accounting for approximately half of the overall cost. The proportion of supplies from the primary and secondary suppliers will reportedly be adjusted based on Xiaomi electric vehicle’s actual sales after its launch. The report also highlights the possibility of Xiaomi introducing additional battery suppliers like BYD through an open bidding process to lower battery costs and enhance bargaining capabilities in the future.

(Photo credit: Xiaomi FB)

In recent times, Transsion Holdings, often referred to as the “African King” in the smartphone industry, has voluntarily disclosed a performance forecast on its official website. According to estimates from its financial department, Transsion is projected to achieve a net profit attributable to the parent company owner of approximately 1.58 billion Chinese Yuan (CNY) in the second quarter of 2023, marking a substantial 84% increase compared to the same period in 2022.

Perspective from TrendForce:

• Improved conditions in certain regional markets have facilitated Transsion’s growth, though the growth rate is approached with caution.

In contrast to most Chinese brands that primarily target the domestic market, Transsion has maintained a sales focus on overseas markets. Building on its pioneering advantage by being among the first to enter the African market, Transsion established its position as the market leader. To mitigate the risks associated with dependence on a single market, the company also expanded into emerging markets like India. This strategic approach has contributed to Transsion’s potential for profit growth this time.

Based on the disclosed information, Transsion attributes the increase in profitability primarily to improvements in emerging markets’ economic conditions, leading to increased product sales. However, from a market perspective, the internally estimated 84% growth rate might be based on a relatively optimistic scenario.

Further analysis suggests that the term “emerging markets” here likely refers not to the Middle East and Africa, which have historically represented a significant portion of Transsion’s revenue, but more likely points to the Indian market.

Despite adjustments made by the World Bank and the International Monetary Fund (IMF) in their economic outlooks for the Middle East and Africa, factors like high inflation in countries such as Turkey in the Middle East and Egypt in North Africa have weakened consumer purchasing power. In such an economic environment with declining growth, consumers are likely to feel pessimistic about their future disposable income, resulting in reduced non-essential expenditures such as buying smartphones.

In the case of the Indian market, it has benefited from an economic recovery following a slowdown caused by the pandemic, coupled with a trend of foreign investment shifting away from China as a manufacturing hub. Increased exports have driven GDP growth in India, translating to higher disposable incomes for consumers.

However, despite the seemingly promising outlook for India’s smartphone market, competition is fierce, with brands like Samsung and Xiaomi already occupying a significant market share. As a newcomer to the market, Transsion faces challenges in achieving substantial performance growth amid this intense competitive landscape.

• China remains the largest market for smartphones, indicating short-term market recovery remains challenging.

Transsion’s focus on expanding into overseas markets outside of China has opened doors for potential growth. When examining global smartphone revenue by regional markets, China still reigns as the largest single-country market, contributing nearly a quarter of the company’s revenue. However, a closer look at China’s recent macroeconomic performance reveals a youth unemployment rate surpassing 20%, reaching a staggering 21.3%.

Given the rising unemployment rate, it can be inferred that consumers may hold pessimistic expectations for their future disposable income. Moreover, as the smartphone market matures and innovation becomes scarce, the lack of growth momentum in China’s market suggests that the overall smartphone market may continue to struggle to recover in the short term.

(Photo credit: Transsion)

TV sales in China hit their peak in 2019, with 44.5 million units sold, but the market experienced a sharp decline in 2020. This was due to the previous marketing strategy of lowering prices to increase sales volume no longer being effective for small and medium-sized products. In response, brands shifted their focus to larger-sized products, specifically those with a screen size of 65 inches or above, which has accelerated the trend of larger TVs dominating the market.

Panel prices skyrocketed between 2020 and 2021, causing a significant price disparity for TV products during promotional events in China. In the 2021 618 promotion, 55-inch TV prices surged by 67% compared to the previous year, while 65-inch TVs increased by 50%, leading to a surge in demand for larger TV sizes. TVs with a screen size of 55 inches and above accounted for over 65% of the market share in China in 2021, and it is anticipated to reach 80% by 2022. With greater discounts, 65-inch TVs became the mainstream size in 2022, surpassing 55-inch TVs in sales volume and market share. The market share of smaller TVs (43 inches and below) fell from roughly 30% to 16%.

According to recent market research, the dominance of smart TVs has surged from 85% in 2016 to a staggering 98% in 2022. Additionally, the popularity of 4K TVs has risen rapidly, with an 80% market share in 2022, following their introduction in 2014. The shift towards these new TV standards has been fueled by ongoing price cuts in the retail sector and the growing demand for larger screen sizes.

The scale of promotions during China’s 618 and Double Eleven shopping festivals could be affected by the upward trend of larger screen sizes and the rise in panel prices in 2023. As a result, brands are expected to shift their promotional strategies towards larger TVs, particularly 75-inch and 85-inch models, which generate more revenue. Consequently, TV sales in China for this year are predicted to decline further by 1.7%, with an estimated sales volume of approximately 30 million units.v

The expected 2022 development pattern of the notebook computer business laptop market will show that Lenovo, Dell, HP, Apple, Asus, and Acer, the world’s six leading notebook computer OEMs, account for a total business laptop market share of as high as 94%, which is a double-digit percentage gain compared to a market share of 80.8% in 2021. Shipments of business laptops originating from the six major OEMs in 2022 is estimated to reach 80.29 million units, an increase of 8.2% compared to 74.22 million units in 2021, which is contrary to the YoY decline of 6.7% in the overall global business laptop market from 2021 to 2022.

Upon further observation, the aforementioned development trend is primarily due to a sharp decrease in the supply of small market share business laptops from OEMs such as Samsung, NEC, Huawei, and Xiaomi, while supply from the six major OEMs has increased. Comparing the two, the target market of smaller market share OEMs may be limited to their respective home countries. If market demand for business laptops in their home countries approaches saturation, coupled with limited capacity for expansion and a lack of strategic planning for global market access, it will be difficult to displace the top six OEMs with their targeted global market scope, nor do smaller market share OEMs have the strategic and technical ability to expand production capacity in time to meet the huge demand of the global business laptop market.

Performance of global business laptop market will decline sharply in 2023 and pandemic premiums are expected to reappear in 2024-2025

As the key driving force behind the global notebook computer market, business laptops are expected to reach 85.45 million units in 2022, a YoY decline of approximately 6.7% compared with 91.55 million units in 2021. However, shipments of business laptops will account for 43.8% of total shipments of all laptops (including business, consumer, and Chromebook laptops), setting a record for highest proportion of shipments in the past five years and since the global spread of the COVID-19 pandemic in 2019. With Chromebook shipments losing momentum, business laptop sales growth has prevented the market from falling off a cliff.

With the end of pandemic-related business laptop demand, business laptop shipments in the global notebook computer market is expected to diminish to 74.94 million units in 2023, and YoY decline will expand to 12.3%. If inflation in the consumer electronics market can be significantly slowed in 2H22 and the 1H23, cyclical “back-to-school” and “holiday season” growth momentum in 2H23 will benefit the notebook computer consumer product market, increasing the proportion of consumer device shipments in the global notebook computer market to 49.4% in 2023, while the proportion of business laptop shipments will recede marginally to 41.6%.

Although growth momentum in the current business laptop market is weak, the market performance of business laptops is still highly anticipated due to the “bulk sale” characteristic of business laptops, the fact that many companies must purchase replacement “Durable Goods” every 2-3 years, and the expectation that business laptops purchased during the severe pandemic of the past two years will be replaced subsequently from 2024 to 2025.

（Image credit: iStock）

Chinese smartphone brands such as Xiaomi, OPPO, and Vivo all have their own production lines. In recent years, these brands have accelerated their overseas deployment due to rising labor costs in China, growing geopolitical risk factors, and the spread of the COVID-19 pandemic. Not only will Xiaomi produce mobile phones in Vietnam, but the company will also continue to expand production lines in India and Indonesia in the coming years. OPPO has also set up factories in countries including India, Indonesia, and Turkey to meet the needs of neighboring markets. Vivo has successively set up factories in India, Bangladesh, and Indonesia, and initiated its production lines in Turkey and Pakistan in 2021. Since current trends have the Chinese market declining more than the global market, OPPO and Vivo’s proportion of overseas production capacity is expected to increase gradually. As for Xiaomi, which has always been active in overseas markets, the company will continue to expand its production capacity in India and Vietnam.

Xiaomi’s achievements in expanding overseas markets are most outstanding, OPPO following suit, Vivo rushing to catch up

From the perspective of Chinese brands, Xiaomi has been deeply involved in overseas markets for many years. Its overseas revenue was only RMB9.1 billion in 2016, but by 2018, overseas revenue had exceeded RMB70 billion. Xiaomi currently has a market share varying between 10 and 25% in Europe, India, Indonesia, Vietnam, and the Philippines. On the other hand, OPPO has been tackling overseas markets aggressively since 2018, and currently has a market share between 10-15% in India, Pakistan, Indonesia, Vietnam, and the Philippines. As for Vivo’s late start, its market share in India, Pakistan, and the Philippines is approximately 10-15%.

If the overall market is divided into the Chinese market and the non-Chinese market, shipments from Xiaomi, OPPO, and Vivo to the non-Chinese market are estimated to account for 74%, 66%, and 46% of total shipments, respectively, in 2021. Since China’s smartphone shipments may decrease by 16% in 2022, and recovery is limited in the short term, Xiaomi, OPPO, and Vivo are expected to focus more on overseas markets in the future and the proportion of non-Chinese market shipments is expected to increase further.

（Image credit: Pexels）