Chinese Foldable Phone Market on the Bend

Competition will ramp up in 2022

Until recently, the market for foldable devices in China has been relatively lacklustre. But in the space of a few months toward the end of 2021, competition has ramped up. For a tech market that’s normally hot on the heels of any trends and innovations in smartphone designs, Chinese manufacturers have been sluggish in releasing foldable smartphones. Alongside this slow pace, a distinct lack of presence from Samsung in China has meant very few foldable smartphones have been available to buy, with the only real options being Xiaomi and Huawei.

But there are signs that the trickle of foldable smartphone launches is turning into a torrent, and with more releases expected from Chinese brands in 2022 we may start to see foldables take off.

Huawei has previously been at the forefront of Chinese innovation and it was actually among the first to launch a folding device, but its recent woes have resulted in a dramatic downsizing of its smartphone business. As a result — and despite Huawei initially leading the foldables pack — it’s made little impact on the Chinese foldable phone market, leading to very low levels of adoption, even in comparison with the slow pace seen in the Western world.

Manufacturers that have filled Huawei’s shoes — most notably Oppo, Vivo and Xiaomi — have taken their time launching foldables. One reason for this is the design challenge faced by any company seeking to develop such a complex device, particularly following initial design failures in the category. This is something that Oppo noted in the launch of its first foldable phone, stating that it had spent two years refining the design; this could perhaps be interpreted as cautiously avoiding launching a device with design issues, as others have been seen to do.

With the remaining Chinese manufacturers typically focussing on low- to mid-priced smartphones, a foldable smartphone acts as an aspirational product for both manufacturers and customers — a good example being TCL’s efforts with foldables to date.

Huawei previously had the scale and research and development budget to commit to investing heavily in new smartphones. But following its tumbling sales, strategic investments in this area have become less of a focus for the company. The likes of Oppo, Vivo and Xiaomi have taken Huawei’s loss of innovation prowess as an opportunity, and we’re now seeing moves to be recognized globally as leaders of this market.

Following the launch of Oppo’s Find N and Huawei’s P50 Pocket in December 2021, and Honor’s Magic V in January 2022, people’s options are starting to widen. Xiaomi, after introducing its first foldable in April 2021, is rumoured to be announcing a new foldable phone soon. Vivo is also expected to join China’s foldable ranks in 2022. Chinese consumers are becoming spoilt for choice, and with more devices surely set to join the market from other Chinese and international brands, competition is expected to become a lot more intense.

With Samsung leading the foldable smartphone charge in the West, seeing only limited competition from Motorola, there’s been less evolutionary pressure on foldable smartphones and their design. We don’t expect to see the same diversity of style as we did before the arrival of slate-type touch-screen mobile phones. But the increased competition in foldables will let consumers vote with their wallets on what foldable designs work best. This is ultimately a hugely important moment for the foldables market and a real test not only for design choices, but also of consumer appetite.

Pressure to develop a strong foldable offering in China will have far-reaching benefits, leading to better products worldwide. Although Samsung doesn’t compete extensively against the likes of Oppo and Vivo in the Chinese market, it will be feeling pressure as Chinese phone-makers launch foldables in the West. Samsung has already seen its mobile phone position challenged by Chinese companies in premium markets, with foldable smartphones being one of its remaining crown jewels. As Chinese-designed foldables enter the market, Samsung will be reminded of the fragility of its foldables position, with both price and design increasingly scrutinized by potential customers.

An increasing range of foldable devices and demand is set to help bring the foldables market to scale. Foldables account for a fraction of global smartphone demand, meaning flexible display technologies haven’t hit efficient manufacturing capacities. As more and more smartphone brands and models enter the folding foray, CCS Insight expects the cost of these handsets to drop thanks to economies of scale and competitive pressures. Assuming the folding design resonates with customers, in a few years we may see folding screens as a staple feature in the flagship market.

Following Huawei’s international launch of its foldable P50 Pocket in January 2022, and with the latest slew of Chinese-designed folding smartphones set to launch globally later in 2022, buyers around the world will start to see flexible displays less as a novelty and more as a serious potential purchase. But for manufacturers, innovation will be crucial to staying relevant; we expect consumers to quickly vote with their wallets on preferred designs and features, clearly marking the winners and losers of the foldable-phone race.