China is one of the most lucrative markets in the world and it also happens to be one of the most competitive. It has not been easy for Samsung to compete in China particularly against the likes of local manufacturers like Huawei, Oppo and Xiaomi. Samsung's market share in China has already dropped 8 percent this year compared to its peak share of 21 percent back in 2013. Market analysts now fear that the Galaxy Note 7's battery issues might push Samsung down further in China.
Samsung heavily relies on its mid-range handsets to maintain a footing in China as most of the sales come from its Galaxy A and Galaxy J series. Handsets in this series cost under 3,000 yuan ($450) while the Galaxy Note 7 costs north of 6,000 yuan ($900). The company would have pinned its hopes on the Galaxy Note 7 which comes with innovative new features to capture some share of the country's high-end smartphone market. However, the Galaxy Note 7 battery issue might prevent it from doing that.
Samsung has already said that the Galaxy Note 7 units it officially shipped in China have batteries from another supplier so they are not a fire hazard and that's why a recall has not been initiated in the People's Republic. Some users in China have posted images of their burnt units online but Samsung was quick to respond to those reports. It said that investigation showed that external heat was applied in these incidents, but didn't offer more details about the investigation itself. Samsung has recalled 1,858 Galaxy Note 7 units in China which were sold as test phones before the official release. Handsets shipped after the official release feature batteries from Amperex Technology which is now the sole battery supplier for the Galaxy Note 7.
Market analysts are of the view that the decision to not recall handsets in China could prove to be damaging for Samsung. Canalys research director Nicole Peng says that this is going to create a “trust crisis” for Samsung in China and that it would be better for Samsung to initiate a complete recall in the country instead of trying to offer repeated explanations about battery suppliers as this may cause frustration in existing and potential customers.
It's expected that local rivals like Huawei and Oppo are going to take advantage of Samsung's blunder with the Galaxy Note 7, some potential customers may even opt for the iPhone 7. Samsung is predicted to drop to 8th position in China's smartphone market.
