The rise of domestic wearable brands: Huawei and Xiaomi are among the top five

Our reporter Chen Jialan reported from Guangzhou

Contrary to the trend, in the wearable device market, some Chinese manufacturers still handed in a good answer.

Recently, a number of smart wearable concept listed companies have released third-quarter performance forecasts, and the performance is pre-increased. Jiahe Intelligent (300793. SZ), an upstart in the wearable field, released a performance forecast, and it is expected to make a profit of 140 million to 160 million yuan from January to September 2022, an increase of 72.7% to 97.37% over the previous year. Fenda Technology (002681. SZ) expects that the net profit attributable to the parent in the first three quarters will increase by 188.55%~195.36% year-on-year. The main reason for the increase in performance is the steady growth of the company’s core businesses such as electro-acoustic products, health appliances, and smart wear.

At the same time, the latest research from the device team of market research firm Strategy Analytics shows that in the first half of 2022, Huawei has become the world’s second largest wearable device supplier in terms of both shipments and revenue. Huawei currently accounts for one-seventh of all major wearables revenue in the world.

Neil Mawston, executive director of Strategy Analytics’ global wireless practice service, said in an interview with a reporter from China Business News that in the first half of 2022, Chinese brands such as Huawei and Xiaomi accounted for nearly four-tenths of all global wearable device shipments. From low-cost fitness bands to mid-range smartwatches, Chinese brands have a strong presence in the wearables segment.

The reporter noticed that in recent years, domestic smart wearable brands are rising rapidly, attracting more and more consumers to pay.

The rise of Chinese brands

From the perspective of category distribution, mainstream wearable devices present a situation of “three pillars” of watches, bracelets, and headphones. Among them, the shipment of ear-worn devices, mainly TWS earphones (true wireless earphones), continues to maintain a high level, which is not unrelated to the cancellation of 3.5mm earphone jacks in more and more mobile phone products.

In recent years, the scale of the global wearable device market has increased year by year, and the growth rate has fluctuated around 20%. According to IDC data, the global wearable device market will ship 533.6 million units in 2021, an increase of 20.0% over 2020.

In fact, in the context of the slowdown in the growth of the traditional consumer electronics market, wearable devices are regarded as the next generation of new engines to drive market growth, and have attracted more and more attention in recent years. And Chinese brands and manufacturing industry chains have also benefited from this dividend to flourish.

In recent years, the influence of Chinese wearable brands in the global market is expanding. Taking TWS earphones and smart watches as examples, the above two tracks are changing the situation where Apple is the dominant player in the past, and correspondingly, domestic brands are on the rise.

In IDC’s data, in 2021, the world’s top five wearable device manufacturers, Chinese brands will occupy two seats, Xiaomi and Huawei. In the report of Strategy Analytics, among the top five wearable device manufacturers in the world in the first half of 2022, Chinese brands accounted for three seats, Huawei and Xiaomi and Imoo (the little genius of BBK).

In the domestic wearable market, domestic brands are developing more rapidly. According to IDC’s tracking of China’s wearable device market in the second quarter of 2022, the top five in the market are all local Chinese brands except Apple.

Pan Xuefei, assistant research director of IDC China, told reporters that China’s wearable device manufacturers have been developing rapidly before 2019. In the past two years, their share of the global wearable market has been basically flat, and the development has been relatively stable, occupying a certain market in the global market. status.

The rise of domestic brands is also inseparable from the Chinese market’s drive to the overall wearable market. Our reporter noticed that one-fifth of the world’s wearable device shipments come from China. The wearable market shipped nearly 140 million units, a year-on-year increase of 25.4%, accounting for 26.24% of the global wearable device shipments.

Judging from the current hot TWS earphone market, Xiaomi has squeezed into the top five in the global TWS earphone market in 2021. In the domestic market, domestic brands are developing more rapidly. According to data released by Canalys, a world-renowned market research organization, in the second quarter of 2022, the domestic brand Xiaomi TWS earphones will surpass Apple’s market share in the Chinese market, with a market share of up to 14%, ranking first. In addition to Xiaomi, Edifier, Huawei, and OPPO are also in the top five in the domestic market. Among them, OPPO’s market growth rate has reached 119%.

At the same time, the global market share of Chinese brands has also steadily increased. According to Canalys data, in the second quarter of this year, Xiaomi’s market share in the Russian TWS market also ranked first, and OPPO’s market share in the Indian TWS market soared by 583% year-on-year.

Internet analyst Zhang Shule said that the counterattack of domestic headphones shows that China’s intelligent manufacturing is more in line with the needs of the Chinese market and more in line with the usage habits of Chinese people, rather than just relying on simple cost-effectiveness to achieve competitive advantages.

“Despite the current situation, Chinese manufacturers are still actively facing market challenges and improving the market development path.” Pan Xuefei said that on the one hand, mainstream manufacturers are gradually improving their product types and consolidating the entry-level market in terms of product line layout. Exploring and developing the mid-to-high-end market upward; while maintaining the volume against the trend, it can strive for more receivables and profits, and improve operational efficiency. On the other hand, mainstream manufacturers are also making continuous efforts and investment in product scene expansion and technology accumulation. In addition to relatively mature sports scenes, the exploration of sensing technologies and algorithms in healthy scenes is also continuing. In addition, Chinese manufacturers It is constantly promoting the linkage with other IoT (Internet of Things) scenarios such as home and vehicle.

Pan Xuefei said that in the global wearable market, Chinese manufacturers are also actively exploring market potential in more regions. The resources of brands and channels accumulated by Chinese mobile phone manufacturers in overseas market expansion also lay an important foundation for wearable devices in overseas markets. Base.

Neil Mawston, executive director of Strategy Analytics’ wireless device strategy, pointed out that the Apple Watch is driving the development of high-end smartwatches in China. Since Apple’s iPhone is so popular, it’s good for Apple to sell the Watch alongside it. But local Chinese brands with affordable prices and good 4G performance are filling the mid-range and entry-level market, such as Xiaomi.

slowing demand challenge

Although Chinese manufacturers already occupy a certain industry position in the wearable device market, Apple is still the dominant player in the global wearable market. Although Chinese brands are also moving into the high-end market, it is not easy.

Neil Mawston said that Apple, Samsung, Garmin and Fitbit are the main brands that Chinese manufacturers compete in the global high-end wearable device market, and it will be difficult to beat Apple, so companies like Huawei may also have to target other brands such as Garmin or Garmin. Samsung for growth. In addition, getting high-end wearables into high-end retail channels (such as airport stores) will not be easy, which will also be a challenge for Chinese brands in 2023. “There’s a lot of competition from other OEMs (original equipment manufacturing) and retail channels in the premium wearables industry because that’s where the best margins are made,” said Neil Mawston.

Due to various reasons such as the repeated outbreak of the new crown pneumonia epidemic, inflation, decline in consumer sentiment, and bottlenecks in industry upgrades, the global wearable market is currently facing growth challenges, and it is also a fact that the sales growth of the wearable device market has slowed down.

The Strategy Analytics report noted that global wearable device shipments declined for the second consecutive quarter in the second quarter of 2022, following the first decline in the first quarter of 2022. The economic downturn and geopolitical uncertainty have led to a sharp drop in demand for fitness bands, function watches, and hearables, although modest growth in smartwatch demand is only partially offset by continued growth in smartglasses and untethered VR, albeit from a low base this growth.

At the same time, IDC data also shows that the global wearable device market shipments in the second quarter of 2022 were 107 million units, a year-on-year decrease of 6.9%. In the second quarter of 2022, China’s wearable device market shipments were 28.57 million units, a year-on-year decrease of 23.3%, and the year-on-year decline for two consecutive quarters. However, Ramon T. Llamas, research director for mobile devices and AR/VR at IDC, still believes that although the global wearable device market shipments declined in the second quarter of 2022, shipments for the whole year this year are likely to be flat with last year, rather than slip. IDC also predicts that the global wearable market will grow by 0.4% year-on-year in 2022.

Pan Xuefei said that in the past three years, sports watches, TWS headphones, and active noise-cancelling headphones have successively detonated the market, achieving a period of rapid growth in the wearable market. Next, on the one hand, the market needs to extend the periodic growth cycle as much as possible through refined positioning, and on the other hand, it should continue to explore the next stage of growth.

Although the overall market is down, as the adult watch market with the most development potential in the wearable market, the high-end trend in the first half of 2022 is especially regarded by institutions as a bright spot. According to IDC data, in the first half of 2022, the proportion of shipments of products above RMB 2,000 will continue to grow, with shipments increasing by as much as 29% year-on-year. Pan Xuefei pointed out that from the perspective of the supply side, manufacturers gradually pay more attention to revenue and profits than the scale of shipments themselves during the period when the market environment is cold. Therefore, the product layout will gradually focus on the high-end market. From the perspective of consumption, the overall consumption willingness of high-income groups is less affected by the challenging economic environment, especially for smartwatches with relatively weak rigid demand. Consideration of improvement, more active participation in daily sports, thereby stimulating more consumer demand.

It is worth noting that even though the wearable market demand is declining this year, some market research institutions are still optimistic about the development prospects of some wearable product segments, and believe that these markets still have good growth space in the next few years. IDC predicts that from 2023 to 2026, China’s adult watch market shipments will still achieve a growth rate of more than 10%.