A little over a year, Liwan Liang, a 38 year old entrepreneur did not manufacture smartphones. This year is expected to produce 10 million.
Liang’s company, Xunrui Communications, component purchasing smartphones and supplies them to several small factories around Shenzhen, in southern China. There, skilled workers assemble parts to make basic smartphones that sell for as little as $ 65 (about 50 euros).
Last year the smartphone manufacturers produced about 700 million sets. But the market has taken the form of a dumbbell.On one side are the big names like Apple and Samsung, which sell expensive phones ranging from 300 to $ 600 (225 to 450 euros), and secondly, several hundred little known Chinese brands that are provided in a thousand or more small factories.
The change began in 2011, when computer chip makers began making direct sales of integrated circuits, processors that are the brains of a touch phone. That, coupled with Google’s free operating system, Android, made the production of smartphones was much easier to tackle.
This flood of cheap equipment could damage the prospects of distressed manufacturers like Nokia and Samsung and can force Apple to offer cheaper models. “They have reached its peak,” Liang said during an interview near his office in Shenzhen, which has become a hub for electronics manufacturers. “We are close to having the same level in manufacturing techniques. Thereafter the only difference is the cost and the brand.”
Largest Chinese companies such as Lenovo and Huawei, have also invaded the Chinese market with mid-range phones that cost about $ 200 (about 150 euros). Lenovo last year took 12 percent of the Chinese market.
Cheap Phones: Workers assemble $ 65 smartphones in Global Electronics Guo Wei, one of the hundreds of small Chinese factories engaged in the manufacture of mobile computers.
Liang phones are of very cheap. The built several factories in Shenzhen, including Shenzhen Guo Wei Electronics Global, a nondescript building that opened in 1991 as a manufacturer of phones and audio equipment. In Guo Wei, young engineers Xunrui relax smoking and drinking warm Coke while playing video games on various laptop brands.
One floor up, past a metal detector and into a room in which pressurized air blows the dust and other impurities from the blue robes of workers are production lines, are five, each with 35 young workers able to weld and 3000 smartphones pack a day.
Guo Wei has had to make some investments to enter the field of smart phones, including import weld inspection team from Korea. Riding a production cost about $ 1.6 million, according to Li Li, manager of factory production showed us the equipment.
“The techniques are very complicated compared to older models of phones,” said Li, who joined the factory 17 years ago to work in a department that is dedicated to repairing phones.
But the real reason to come to smartphones that last year was the big chip makers, including MediaTek and Spreadtrum, based in Taiwan, systems began to offer “turnkey” design phones with an integrated circuit Android and other preinstalled software.Spreadtrum says likely to sell 100 million units this year.
Each chip costs 5 to $ 10 (about 3.8 to 7.6 euros), depending on the size of the phone screen and other features. In total, said Liang, the manufacturing cost of a smartphone is about $ 40 (about 30 euros). He claims he can make up to 30,000 a day smartphones for brands like Konka Mobile and operators like China Unicom.
In the U.S., the high cost of a smart phone is usually cover by operators, which offer great discounts if consumers sign a contract. In China it is the same. Liang says its phones are sold for about 65 or 70 dollars (about 50-57 euros), but may cost only $ 35 (about 26 euros) with a contract.
That makes China, now the world’s largest market for smartphones, a challenging site to compete for foreign brands. Apple has 38 percent of the sales of smartphones in the U.S., but its share in China is 11 percent and falling. Google has struggled to win even more money. While Android devices use, not usually come with the applications and the Google search tool installed (see ” Android takes off in China, but Google has little to offer “).
Liang says his goal is to make smart phones affordable but still not as good as the iPhone.That means that the camera and the LCD screen may not be the best and the battery life may be shorter. “Always use the word ‘acceptable'” he says. “Many users need only an acceptable product. Need not a perfect product.”
What is certain, according to Liang, is that the quality of its factories producing phones increase. “In the bottom of the scale, no benefits,” he explains. “Everyone is trying to improve their techniques.”