We all wonder, why Chinese phones or Chinese companies like MI Xiaomi launch cheap phones at same price with better features, sensors, processors and other things (let’s not talk about software experience and updates). So in this article, we will be discussing about some factors that affect the price and we will also try to clear the most asked question, should I buy cheap smartphones or invest in brand value for better service.
One of the most commonly known reason for the low prices on same specs sheet is the cost of manufacturing or labor. China has some of the lowest labor costs in the world, and that’s the main reason why many manufacturers build products there.
Chinese manufacturers, such as Xiaomi, Huawei and Meizu, also have the advantage of building phones locally, which means they have fewer transportation cost. Even companies like Apple, Samsung, HTC or Sony, have plants in china but the cost of transportation increases which is passed on to the customers.
Not Revolutionary Changes
Another factor that affects the cost of an end product is the research and development cost i.e. the cost it takes to develop prototypes, researching, trying new things. Brands like samsung, invest tons of money to research new things and test them. These costs are passed on to the customers whereas, chinese brands use the same available technology by either purchasing the rights or by doing little to no research on the technology. Already available technology is used by these brands which is not that outdated but saves tons on the cost of the end product.
In many cases, Chinese manufacturers choose a Mediatek processor over Snapdragon, which might not be up there with Samsung’s Exynos units, but is a lot cheaper. Plus Mediatek is also a Chinese company, so it can offer cheap local distribution. Some companies also try to hide spec changes i.e. a samsung phone might come with latest DDR4 RAM i.e. 6GB of DDR4 RAM and a chinese brand might use DDR3 RAM i.e. 6GB of DDR3 RAM which creates a small confusion among the users since both RAMs are DDR3.
Did you see the announcement of the Samsung Note 9, S10? These brands invest tons on marketing, announcements, etc which is again passed on to the end consumer whereas Chinese companies try to keep the marketing up to the online world i.e. contacting you-tubers, bloggers, etc who can do the same kind of marketing under the budget and sometimes even free by providing free units to the writer/editor/you tuber thus creating a win-win situation.
Focus on Online Sales
E-commerce is growing every year and we see a spike in E-Commerce websites. Chinese brands usually focus on Online Sales and avoid local sales which reduces the cost and commission which brands give to distributors, etc. Cost of opening and running the store is obviously high and Chinese manufacturers save these costs, thus dealing directly with the consumers.