How China’s smartphone titans grew to dominate Myanmar’s fledging market

Regardless of Myanmar’s comparatively immature digital economic system, a rapid boom in smartphone proliferation has led the way in which for the nation’s modernization following reforms launched in 2013 that ended a state monopoly over telephone providers.

Since 2013, smartphone giants together with Huawei, Apple, and Samsung have continued to tussle for a share of this fast-growing market. Nonetheless, Chinese players have dominated, with three main companies, Xiaomi, Huawei, and Oppo at present occupying practically 66% of the nation’s cell market, whereas Samsung, the one non-Chinese language model, takes 14% of the market in line with the most recent information as of Canalys estimates for Q3 2020.

Myanmar’s web penetration reached 41% in January 2020, with a complete of round 22 million Burmese on the web. Nonetheless, with round 68 million cell phones within the nation, a big proportion of customers aren’t utilizing internet-connected smartphones, however relatively conventional cell telephones.

Nonetheless, Myanmar’s transformation has been exceptional, Marc Einstein, chief analyst at Tokyo-based ICT advisory agency ITR Company, famous, “The revolution from ‘no telephone’ to ‘smartphone’ is sort of exceptional. That’s the one nation on the earth the place, in a couple of years, hastily, everyone has a telephone.”

But, with Myanmar’s society more and more coming on-line, particularly as COVID-19 has restricted offline actions, Chinese language smartphone giants are focusing on Myanmar’s market potential greater than ever.

What do shoppers in Myanmar need?

Myanmar is a “younger” nation, with 55% of the population under 30 years old. Burmese shoppers are notably price-sensitive, a client trait not unfamiliar to Chinese language corporations. Xiaomi, Huawei, and Oppo have subsequently a comparative benefit in comparison with extra premium manufacturers like Apple and Samsung in Myanmar, thanks to those corporations’ reasonably priced value level on low-tier handsets.

Huawei made robust inroads within the nation after 2013, remaining the top-selling producer till early 2016, when Xiaomi surpassed the Shenzhen-led telecom big, in line with an area information report by Frontier Myanmar, citing native retailers. Within the interval from 2016 and 2018, Huawei’s market share was slowly eroded by Chinese language rivals Xiaomi and Oppo, and from 2018, Xiaomi grew to become the highest vendor and has not regarded again since then.

When requested in regards to the causes behind Huawei’s decline, Einstein cited Huawei’s strategic positioning as a premium model. “For a few years, Huawei has tried to keep away from the mass market. You’ll be able to inform from a few of its newest cell phones such because the Mate 30 and Mate 40. They’re designed to compete with Samsung and Apple. Additionally, there’s this large query about its Android system. However because the commerce conflict between China and the US remains to be standing now, individuals shopping for a Huawei telephone might run the chance of not gaining access to Google,” he mentioned. 

Whereas Huawei advised KrASIA in an e-mail interview that it’s “one of many greatest smartphone distributors” within the nation, Beijing-based Xiaomi has capitalized to seize a number one market share of over 31% in Myanmar as of October 2020, whereas Huawei wasn’t within the high 5 distributors when it comes to models shipped. Xiaomi has emulated Apple by inserting its main stores in swanky buying facilities in main cities like Yangon and Mandalay, but its units are priced considerably decrease than the Cupertino-based agency. Additionally, Xiaomi has positioned its subbrand, Redmi, as one of the crucial standard manufacturers within the nation.

“The value to efficiency ratio is our most potent weapon in Myanmar,” Fuliang Bai, normal supervisor of Xiaomi Myanmar, advised KrASIA. The Redmi Word 9 Professional, the model’s newest flagship, retails in Myanmar for MMK 320,000 (USD 244), in comparison with over MMK 1 million (USD 672) for varied Apple’s iPhone and different premium units.

Gross home product (GDP) per capita in Myanmar in 2019 was simply USD 1,408, trailing a few of Xiaomi’s different Southeast Asian markets like Indonesia at USD 4,136, Thailand at USD 7,808, and Vietnam at USD 2,715, according to data from the World Bank. The relative lack of disposable revenue in Myanmar ends in much less demand for costly premium units, therefore the success of Xiaomi’s Redmi merchandise. 

“I believe Xiaomi is the preferred one in contrast with different Chinese language manufacturers. It’s actually low-cost and so they can have a greater digital camera.” mentioned a salesman at Skywards, an area cell phone retailer positioned at Sanchaung township of Yangon.

The significance of the digital camera can’t be understated within the minds of Myanmar’s shoppers. With the surging entry of smartphones and social media, the selfie bandwagon has been catching on in Myanmar, which makes the standard of the digital camera one of the crucial vital standards in shopping for a smartphone.

Whereas Xiaomi’s main place will not be below imminent risk, having steadily elevated its market share over the past two years, one other Chinese language participant, Oppo, thanks additionally to its funds model Realme, is gaining momentum. With a development of 86% year-on-year within the third quarter of this 12 months, Realme is capturing the likes of Burmese shoppers who’re searching for budget-friendly offers with an honest digital camera, with smartphones priced from MMK 139,900 (USD 106) on one of many nation’s hottest e-commerce website.

The model, accounting for 10% of Myanmar’s market share as of October, is especially focusing on the lower-end section of the nation’s smartphone market. Phoo Moh Moh, a 23-year-old salesperson at an area cell store in Sanchaung township of Yangon, advised KrASIA, “From my gross sales expertise, the standard of the smartphone is sweet and the digital camera normally has a excessive decision.”

Bringing smartphone connectivity to rural areas

Whereas Myanmar’s cell market might not comprise essentially the most profitable alternatives within the area, the room for development is immense with GDP per capita anticipated to rise greater than 55% by 2022. Most shoppers are present in Myanmar’s city areas, however the proportion of Burmese living in cities was only 30.8% in 2019, leaving many potential shoppers outdoors the attain of conventional gross sales channels.

For city shoppers, sporting the most recent new smartphone is seen by many as an indication of social standing, whereas rural smartphone customers barely reap the benefits of the smartphones’ capabilities past fundamental textual content and calls, in line with a report performed by the Groupe Speciale Mobile (GSM) Association in 2015. That mentioned, some rural customers do acknowledge the necessity for a smartphone in the case of Fb, Viber, and different social platforms.

“Based mostly on the qualitative analysis, most rural individuals had low model consciousness; if they’d any, it was Huawei. For them it was vital to personal any touchphone, whatever the model,” the GSMA report added.

Min Aung Thu, a 28-year-old who’s at present working in Yangon, comes from a small village in Sagaing Area’s Ye-U Township. “Most people within the village proper now are utilizing smartphones. They’re principally Chinese language manufacturers, and the value vary is round MMK 100,000 (USD 76.20 ) and MMK 200,000 (USD 152.41).”

For rural shoppers, model visibility will not be at all times a differentiating issue, Min Aung Thu defined. “For my village, web connectivity will not be an enormous difficulty, individuals normally go to close by cities to purchase telephones. They don’t care in regards to the model. They only go to the store, inform the sellers their value vary, and ask for suggestions. A lot of the telephones within the space are imported from the Chinese language border, due to the geographical proximity.”

Whereas rural customers are inclined to have low model consciousness, Xiaomi’s Bai defined that infrastructure points have continued to hinder a higher adoption of smartphones in rural Myanmar. Nonetheless, alternatives lay there.

“I made some journeys to some villages the place the supply of electrical energy and Web are nonetheless low. Whereas these are challenges to us, we see these as alternatives for us to develop within the close to future,” He defined to KrASIA.

Nonetheless, the nation is growing its infrastructure. A Common Service Fund (USF) was established in 2018 to expand telecommunications services to the most remote regions of the country. This fund, which is the primary of its variety in Myanmar, will use charges collected from the market’s predominant telecoms operators to pay for community enlargement.

Whereas Chinese language smartphone giants might sit up for a 5G future of their residence market, Myanmar telco’s are nonetheless centered on enhancing 4G connectivity within the nation, earlier than ultimately upgrading to the most recent technology of networking know-how.

“Within the coming two to 3 years, value sensitivity will nonetheless play an enormous position in rural areas. There will probably be a variety of Chinese language telephones priced between USD 30 to USD 50. That’s what we name the gray market telephones [phones that are sold without a bill and warranty]. Within the city sector, extra individuals will go for premium manufacturers like Samsung, Huawei, and Apple. Samsung will probably be fairly standard within the coming years, as it’s not that costly in contrast with manufacturers like Apple,” mentioned Einstein. 

Chinese language companies are additionally leveraging their model recognition to increase its choices within the nation, Bai famous. “Along with smartphones, we see the potential for our TV merchandise, on condition that TV remains to be shortly adopted by native households.”