The burgeoning middle class in China certainly makes for a very attractive target for retailers. That group of shoppers is growing at a very rapid rate, and companies like the US-based Apple are hoping to cash in on this huge consumer market. Other companies salivating at the huge pool of consumer-electronics loving customers should keep one thing in mind though. What sells well somewhere else doesn’t necessarily translate to the middle class Chinese marketplace.
For example, the Apple iPhone in China is being outsold in the world’s largest smartphone marketplace by a Chinese company that is not even 1% the size of Apple. Who is the company with the perfect recipe for marketing smartphones to China? That company is Coolpad (Kupai in Chinese, translated approximately as “cool clique”), and they are a subsidiary of the Shenzhen based China Wireless Technologies firm.
While Apple does attempt to keep the marketing and manufacturing costs down on their globally popular iPhone, the cost to a potential Chinese customer for an iPhone is 3,088 yuan ($496 US). But the Coolpad smartphone sports a retail price which stacks up much better against the 24,565 yuan ($3,900 US) a year that the typical urban Chinese resident has at his or her disposal. Coincidentally, the average urban resident is the largest core of smartphone buyers in China.
As opposed to Apple’s nearly $500 US retail price, Coolpad offers a line of smartphones for 1,000 yuan ($160 US) or less, with the Coolpad smartphone running a bargain priced 658 yuan ($106 US). The Apple iPhone would require an investment of approximately 12% of the annual disposable income for the average urban Chinese consumer. However, the Android powered Coolpad does not ask a potential Chinese customer to make such an emotional or financial investment, as it totals less than 3% of that person’s annual disposable income.
Recently Apple slipped from 4th place down to 6th among the top ranked smartphone vendors marketing in China, while Samsung and Lenovo are in the top 2 spots. Coolpad is the 3rd ranked smartphone seller currently, showing that urban Chinese customers are willing to spend a little more money for popular phones like the Galaxy S III and others, just not as much as what is required to purchase an Apple iPhone.
The sweet spot for the Coolpad smartphone lineup seems to be China’s newly wealthy. While still not comparatively wealthy when put up against the United States upper-class, with 24,565 yuan a year to spend on nonessential items, that is a large uptick from the past few decades. But it seems that the newly rich Chinese urban consumers have not been comparatively wealthy long enough to squander their money. The Coolpad handset runs the Google Android OS, and offers a 5.0 inch touchscreen display. But do not predict the death of Apple in China quite so soon. Sales doubled in China in 2010 and 2011 for the Cupertino-based smartphone manufacturer.
