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September 27, 2017

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Chinese consumers favor HTC phones less in Sept.: brokerage

TAIPEI--Taiwanese smartphone maker HTC Corp. generated a lower level of interest among Chinese consumers in September, amid the rising popularity of local Chinese brands, according to U.S. brokerage Morgan Stanley.

Taiwan's HTC Corp. ranked third in September with interest levels pegged at 9.3 percent, after having slid from the second place and interest levels of 10.8 percent in August, the brokerage said in a recent report.

Other major international smartphone brands were also facing similar problems as consumers' interest levels in China's local brands — led by Lenovo Group — rose to a combined share of 29.5 percent in China's smartphone market in September, from 27.6 percent in August, Morgan Stanley said.

South Korea's Samsung Electronics Co. retained its top position in rankings but consumer interest in its products slipped from 20.4 percent to 19.4 percent, Morgan Stanley noted.

However, Apple Inc. was an exception as interest levels in iPhone jumped 4.6 percentage points to 12.1 percent in September, thanks to the launch of the iPhone 5 and price cuts imposed on legacy models, Jasmine Lu, a Morgan Stanley analyst in Hong Kong, wrote in the report.

She believed that this indicated a gain in share for the iPhone 5, even though it was unlikely to be available in China before the end of the fourth quarter of this year.

China's Lenovo ranked fourth on the interest level scale with an 8.2 percent share, up from 7.3 percent in August, while Xiaomi Technology rose from 3.6 percent to 4.4 percent and ZTE Corp. from 3 percent to 3.6 percent.

Among Chinese local brands, Morgan Stanley expects mainstream models to stay in the 1,000 to 2,000 Chinese yuan (US$160 to US$320) price bracket, beating global brands such as Sony Corp. and Motorola Mobility Holdings Inc. on competitive pricing, performance and marketing time.

"In our view, the market trends bode well for improved user experience from local brands," Lu said.

"This includes thinner designs, over 4-inch displays and 8-megapixel cameras, suggesting that those companies are trying to narrow the quality gap between themselves and global players," she said.

However, China's local brands are still facing challenges, such as shortening product cycles and highly fragmented competition, which might pressure average selling prices and margins, especially for those companies that lacked scale and differentiated business models, Lu said.

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