Buyers look at smartphones on display at a China Mobile Ltd. store in Zhengzhou, Henan Province. (Photo : www.chinadaily.com.cn)
Lenovo Mobile president Chen Xudong has announced on Aug. 27 that their mobile communications division will be incorporated into Motorola, which it acquired in early 2014.
According to Beijing Daily, the decision is in line with the new Lenovo CEO's strategy to survive the tough competition in the market by focusing on a few select models.
The shift in strategy was made after Lenovo Mobile incurred $292 million in pre-tax losses, with profit rate at -13.8 percent during the first quarter. This occurred after the poor performance in the last quarter of 2014, when Lenovo shipped only 16.2 million phones and its global market share lost 0.5 of a percentage point to 4.7 percent.
Other major Chinese brands, such as ZTE, Huawei and Coolpad, have also ditched the strategy of rolling out hundreds of models a year in response to weakening market demand due to the saturation of the smartphone market.
The China Academy of Telecommunication Research Shipments said that China's mobile phone market tumbled 21.9 percent to 452 million units in 2014.
The report said that as market demands declined, major brands have become unable to bear the huge subsidy cost for new models. They therefore decided to focus on a few select models, following Xiaomi's example whose sales usually reach 1 million units per model.
In 2014, ZTE cut its range in half, while Coolpad reduced the number of its low-end models by 30 percent.
Huawei has also started to adopt the strategy of select models in 2013 and succeeded in maintaining some flagship models, such as the Mate 7, which has sold 4 million units since its release in late 2014.
The domestic mobile phone market has been undergoing a major reform, beginning when the number of major brands dropped from over 80 to 59 in late 2013.
