Mobile phone exports may never reach their peak again. Data disclosed by the General Administration of Customs on November 18 showed that China’s mobile phone exports in the first ten months were 642 million units, a year-on-year decrease of 6.4%.China's mobile phone export volume increased by 2.4% year-on-year in 2015 to 1.343 billion units. 2015 was the peak year for China's mobile phone exports, and then declined year after year, falling to 822 million units in 2022. In other words, exports in 2022 will decrease by 521 million units compared with 2015.How did the export volume of these 521 million mobile phones shrink?

Global market shrinks

According to data from the General Administration of Customs, 81.11 million mobile phone units were exported in October this year, a year-on-year increase of about 10%. However, the total exports in the first ten months still declined year-on-year.

China is the largest base for mobile phone manufacturing and export. In recent years, mobile phone exports have continued to decline. An important reason is the downturn in global mobile phone consumption.

Global smartphone shipments peaked in 2017. According to data from market research organization Counterpoint, global smartphone market shipments increased by 2% year-on-year to 1.55 billion units in 2017. There was a first decline in 2018, followed by year-on-year declines in 2019 and 2020, with shipments in 2022 reaching 1.2 billion units.

The innovation of smartphones has reached a bottleneck period. Gao Shiwang, director and spokesperson of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, told China Business News that this has partially affected consumers' enthusiasm for purchasing, and it has taken longer for consumers to replace their phones, which has led to a global peak in demand for smartphones.

This is reflected in important mobile phone consumer markets around the world.

China's domestic smartphone market peaked earlier. In 2016, China's smartphone shipments reached a record high of 465 million units, and subsequently shipments faced downward pressure. By 2022, China’s local mobile phone shipments will be less than 280 million units, setting a ten-year low.

Several major overseas core smartphone markets are still facing shrinking pressure this year.

According to data from Canalys and Counterpoint, in the second quarter of this year, smartphone shipments in Southeast Asia were 20.9 million units, a year-on-year decrease of 15%, which has been the sixth consecutive quarter of decline; the Indian market, which has been growing for many years, also experienced a downturn, with shipments of 36.1 million units, a year-on-year decrease of 1%, and a year-on-year decrease for four consecutive quarters; shipments in the Latin American market fell by 15.6% year-on-year; shipments in the European market fell by 12% year-on-year, hitting an 11-year low.

In the third quarter of this year, the global smartphone market fell by 1% year-on-year, marking six consecutive quarters of year-on-year decline. Some regional markets have recovered, but overall demand is still weak. Among them, shipments in the United States fell by 5% year-on-year, shipments in India fell by 3% year-on-year, and the Latin American market increased by 11% year-on-year. In the third quarter, the shipments of domestic mobile phone manufacturers in major overseas markets also varied. Among them, Xiaomi's shipments increased year-on-year in the Latin American and African markets, but fell year-on-year in Western Europe and the Indian market; OPPO recorded year-on-year growth in the African market, but fell year-on-year in the Indian market; vivo also recorded a year-on-year decline in the Indian market.

Looking back on the past seven years, the global market share of Chinese local mobile phone brands has actually been strengthened.

According to data from market research firm IDC, among the top five smartphone manufacturers in the world by shipment volume in 2015, Huawei, Lenovo, and Xiaomi were listed, with a total shipment volume of 251 million units, accounting for 17.5% of the total. In 2022, Xiaomi, OPPO, and vivo will be listed, with a total shipment volume of 355 million units, accounting for 29.5%. From 2015 to 2022, leading domestic brands have increased in terms of shipments and market share in the global market.

They just don't make that many phones domestically anymore.

The reporter calculated based on mobile phone export volume and mobile phone production data that in 2015, China's mobile phone export volume accounted for 73.85% of China's mobile phone production. By 2022, this proportion will become 52.68%. In other words, domestically produced mobile phones will be mainly exported in 2015, and nearly half of them will be sold domestically in 2022.

The actions of multinational companies also have an impact on China's mobile phone exports.

Gao Shiwang told reporters that globally, domestic mobile phone brands, Samsung and Apple form three main forces. Samsung gradually withdrew from the Chinese market after 2014, closed its factories in China, and turned overseas to Vietnam and other places. This had a relatively large impact on domestic mobile phone exports in the years after 2015. In the past, Samsung produced mid-to-high-end models in South Korea, and the rest of its production capacity was basically deployed in China. At one time, more than 70% of Samsung mobile phones were produced domestically and most were exported. But currently Samsung has basically no production capacity in China. In addition, Apple has gradually transferred production capacity abroad in recent years.

Gao Shiwang said: "After export volume reached its peak in 2015, we calculated the data and found that export volume decreased by approximately 69 million units a year. The main reason is the change in the overseas model, with manufacturers switching from exporting complete machines to building factories overseas."

Great migration of manufacturing capabilities

Around 2015, local Chinese mobile phone companies began to actively expand overseas production bases.

The first stop for vivo and Xiaomi to go overseas is India. In 2015, Xiaomi opened its first factory in India. In the same year, vivo rented a factory in India to achieve localized production. In 2016, OPPO invested approximately 1.5 billion yuan in building a factory in India.

In 2015, Indonesia began to demand localized production and gradually banned the import of complete models of some models from overseas. That year, an electronics factory acquired by OPPO locally was put into production. This was OPPO's first overseas factory.

Indonesia and India have become the two "base areas" for domestic mobile phone manufacturers to build overseas production capacity, and manufacturers have continued to make arrangements in the following years.

In 2016, vivo already had a factory in Indonesia, and subsequently its production scale continued to expand, from one factory building to four. Xiaomi began producing mobile phones in Indonesia in 2017. OPPO is also expanding its production capacity in Indonesia. In 2020, OPPO invested 500 million yuan to build a production factory in Indonesia, with a designed annual production capacity of 28 million units. In India, Xiaomi announced in 2017 that it would build another mobile phone factory, vivo invested nearly 4 billion yuan in 2018 to build a second factory near the existing factory, and OPPO announced in 2019 that it would invest approximately 3.3 billion yuan in the production of electronic products and accessories in India within 5 to 10 years.

Outside of India and Indonesia, domestic mobile phone manufacturers are looking further afield.

In 2019, vivo plans to build a mobile phone factory in Bangladesh. This will be vivo's third overseas factory at that time. The factory will produce at least 1 million smartphones per year. In 2021, vivo established an intelligent manufacturing center in Faisalabad, Pakistan. This year, it has 8 production lines with an annual design production capacity of 6 million units. Also in 2021, vivo launched an intelligent manufacturing center in Türkiye with an annual design production capacity of 5 million units.

According to the reporter's review of public information, vivo's factories in India, Turkey, Pakistan, and Bangladesh have an annual production capacity of approximately 72 million units, of which the Indian factory has an annual production capacity of 60 million units. In addition to factories in Indonesia and Egypt, the annual production capacity of vivo's other overseas factories accounts for approximately 36% of its total global production capacity. The reporter learned from people close to OPPO that OPPO currently accounts for more than 30% of its overseas production capacity, which is similar to vivo. The reporter also called the Securities Affairs Department of Transsion Holdings as an investor and learned from the relevant person in charge that about 70% of Transsion's production capacity is domestic and 30% is overseas. The overseas factories mainly make smartphones.


The overseas production plants of Chinese mobile phone companies basically meet the needs of the host countries.

After setting up factories in India, the mobile phones sold locally by many mobile phone brands are basically produced locally. In 2018, 95% of mobile phones sold in India were locally manufactured. The reporter saw from a report released by vivo India’s official website that all mobile phones sold by vivo in India are made in India, and 100% of the motherboard manufacturing is completed in India. About 70% of the chargers and headphones are purchased through local partners, and 95% of the batteries are purchased locally.

"The production capacity of our overseas factories is mainly to cover the local area. For example, the factory in India covers India, and the factory in Ethiopia covers Ethiopia. The overseas factories can completely cover local needs. The reason for setting up factories locally is because there are certain preferential policies, which are more favorable than shipping them from China. We will not cover the production capacity of a certain overseas factory to other places, because it is not as cost-effective as shipping (complete machines) from China." said a relevant person in charge of Transsion Holdings.

Zhang Pin (pseudonym), who has been in charge of overseas business for a major mobile phone manufacturer for many years, also told reporters that the factories of domestic mobile phone manufacturers he is familiar with in Bangladesh, Turkey and Pakistan mainly supply local products.

Gao Shiwang said that in recent years, many domestic companies have set up factories overseas. In addition to the local labor cost advantage, the comprehensive cost advantage is not obvious. This is related to the imperfect local supply chain, and although the local labor price is low, the efficiency is not very high.

Zhang Pin also told reporters that the key to motivating overseas factories is not cost. Including India, many hot spots for overseas factory construction that he is familiar with have certain restrictions on the import of complete mobile phones, such as increasing import tax rates and certain local trade protections.

In the future, it cannot be ruled out that Chinese mobile phone companies’ factories in India and other places will be used for global exports.

Vivo mentioned in its official report that in 2022, Vivo will export smartphones made in India for the first time, with the first batch shipped to Thailand and Saudi Arabia. It is expected to export another 1 million mobile phones in 2023.

Is the overseas factory building boom over?

In the past two years, Chinese mobile phone companies have faced complex situations overseas.

In 2022, vivo was raided by the Indian Law Enforcement Directorate. In the same year, Xiaomi's subsidiary was accused by Indian law enforcement agencies of illegally transferring money in the name of paying royalties, and Xiaomi's assets in India worth approximately 4.8 billion yuan were seized. In Europe, the Mannheim District Court in Germany ruled in favor of Nokia in a patent case against vivo. Subsequently, vivo products were removed from the German official website. OPPO had also previously reported that it was withdrawing from Germany and the United Kingdom.

Some Chinese mobile phone brands have faced declining share pressure in India. Canalys data shows that after 20 quarters of glory, Xiaomi lost its leading position in the fourth quarter of 2022, falling to third place with shipments of 5.5 million units. In the third quarter of this year, overall smartphone shipments in India fell by 3% year-on-year, while Xiaomi, Realme, and OPPO shipments fell by 17%, 6%, and 16% year-on-year.

"For mobile phone manufacturers, maintaining the status quo in India is a better choice. In the past, India mostly won users through price or other methods, but they did not achieve particularly good results in terms of profit acquisition. Now it is difficult to recoup early investments. At the same time, the Indian market does still have potential. Domestic mobile phone manufacturers 'love and hate' the Indian market." Gao Shiwang said that India is a relatively special market, and the local situation of enterprises is not representative.

Chen Wei (pseudonym), who is responsible for international business at a leading mobile phone manufacturer, told reporters that not only Germany, but also several major Western European countries, mobile phone manufacturers in the French and British markets may be affected by the Nokia patent lawsuit in the future, while Italy and Spain have not been affected for the time being.

"The global market has changed a lot in the past few years, and the layout and strategies of companies in overseas markets have changed. Manufacturers will do corporate IT construction, import and export trade compliance-related arrangements, corporate structure construction, personnel training, etc. It is all based on (encountering) some events that they gradually realized how to do global layout. During this period, they paid some tuition fees." Chen Wei said.

Chinese mobile phone manufacturers have been aggressively overseas for several years. After gradually realizing the particularity of each overseas market, they are now rethinking their overseas market layout and production capacity layout.

Zhang Pin told reporters that overseas markets have changed greatly. Even in countries that have deployed production capacity, local factories have no profits and have stopped production when encountering excessive changes in exchange rates. Some overseas factories originally planned to radiate production capacity, but did not realize it. Affected by factors such as inflation, changes in the international situation, and the slowdown or even decline of the global mobile phone market, the global layout plans of some mobile phone companies have been subverted or suspended. Companies are very cautious about continuing to acquire land to build factories overseas. For example, in Vietnam, West Asia, Latin America and other places in Southeast Asia, manufacturers have come to inspect, but in the end the factories have not been completed.

"A wave of 'vigorous' factory construction has begun overseas again. I think it will be very difficult in the near future, but in the long run, going global is inevitable." Zhang Pin said.

Chen Wei said that when deciding whether to build factories overseas, manufacturers will consider several dimensions, including local requirements on tariffs and localization, cost and local market capacity. If it is some smaller countries, manufacturers may even give up this market, or enter the local area through parallel imports. Whether to enter an overseas market will be considered based on whether the political situation is stable, whether the economic pillar is strong, and the government's management capabilities. At present, overseas emerging markets with relatively high potential include the United Arab Emirates, Saudi Arabia, and some North African countries in Central and Eastern Africa, as well as Vietnam, Thailand, and the Philippines in Asia, as well as Brazil, Mexico, and Colombia in the Americas.