Comment by tooltalk | Hacker News Reader

Comment by tooltalk | Hacker News Reader

Parent Full thread

>> Samsung share was dropping in PRC before Xi, ... the Note battery recall drama happend and basically THAAD right after ... <<

Sure, except that narrative has too many flaws. Samsung China's smartphone sales increased from 11M in 2011, to 30M in 2012, to about 60+M in 2013 -- no such "drop" before Xi's rise. Then it cratered as Xi's anti-foreign "In China, For China" policy went in full swing. By 2016, Samsung's China sales figure was already down to just over 10M -- the Note 7 and THAAD were likewise inconsequential and Samsung smartphone sales continued to slide in China and China only. During this time between 2016-2017, Samsung's global sales continued to maintain its lead at around 310M even as its Chinese competitors, such as Huawei struggle against Samsung outside China without protection from Xi. Again, this conspicuous drop was in China only and there was no sudden change in consumer preference or product offering, as evident from Samsung's global sales -- ie, while Samsung China sales was down, it was up elsewhere. Xi's mercantile policies and the rising nationalism in China were the only changing variables.

Also it wasn't just Samsung alone either -- Apple was the next major foreign smartphone seller in China. Apple avoided Samsung's fate after Xi's rise in 2013 and Patrick McGee, a FT reporter, has recently released Apple in China: the Capture of the World's Greatest Company, meticulously detailing how Apple countered Xi's "For China, In China," but, by doubling down on China, Apple is in effect "captured" by Xi. see Chapter 26 "Despot" and on.

Looking at sales in 2010s mobile growth market is flawed. look at market share. 2010-2015 was mass smart phone proliferation, the demand denominator was expanding so companies can sell more phones while lose relative marketshare. Samsung PRC share peaked and started dropping right before/around when Xi entered office, i.e. domestic (budget) champions was grown before Xi, they were outcompeted before MIC2025 or battery/thaad drama. Samsung global sales stalled at ~300m and started dipping below (i.e. losing total sales and market share in growth market), again need to look at market share because denominator of global phone sales was exploding. Samsung Could had 40/50% of global sales 500m+ branded sales, instead Huawei+others jumped in and ate big chunk of Android pie, i.e. actual global Android shipments was like 1B, PRC brands including white labeled OEMs captured probably 50%+ of that. Huawei going from 0-200m phone sales abroad while Samsung stalling and even declining at ~300m when they had 500m+ to capture isn't Huawei struggling (aging double digit global YoY growth at the time), it's PRC brands gobbling up new demand at expense of Samsung. Samsung got short term boost after HW ban, then started stagnating again when budget PRC brands went flagship. Also there was huge change in product offering 2010-2015s in PRC, that's when domestic budget brands and then flagships proliferated. There's nothing sudden about any of this, Xi barely had any time in office to engineer some mass buy domestic movement, that only happened late 2010s across variety of domestic sectors.

Patrick McGee / Apple in China is motivated writing. Trying to sell narrative Apple taught PRC everything they instead of you know 100,000s PRC tooling engineers and manufacturing specialistists trying to troubleshoot and scale Apple design. I don't know what Chapter 26 has to do with anything, IIRC it's mostly PRC making Apple kneel to PRC soveign internet, aka follow doemstic laws and Apple complied because they need PRC manufacturing. And doing so let Apple kept their share in PRC for another 20 years which wasn't bad return. And it's not even like Samsung left PRC, they had to pivot back to PRC ODMs (wingtech, huaqin) for ~100 of millions of low end devices (I htink the As and Ms) shortly after.

>> look at market share. Samsung PRC share peaked and started dropping right before/around when Xi entered office ... <<

Sure, you could use either metrics, but it shows the same thing: Samsung China's market share in 2012 was 17.7% (30M). Xi came to power in mid 2013 and Samsung's sales in each quarter 2013 were 18% (12.5M) in Q1, 19% (15M) Q2, 18% (17M) Q3, and 19% Q4 -- ie, it's a steady YoY growth, in relative % or absolute terms.

In other words, Samsung's sales were not affected by local competition "right before" or "around" Xi. Only after Xi's "In China, For China," both market share and absolute sales plunged from 17.7% (2012), to 19% (2013) to 7.9% (2014) or 31M (2012), to 70M (2013) to 35M (2014).

Again, this was isolated to China and as a result of Xi's anti-foreign policy in China only -- Samsung's sales continue to grow outside China to maintain their global lead.

Further, I cited McGee's recent excellent work which clearly demonstrates how Xi's anti-foreign policies suddenly changed business climate in China against foreign competitors -- which starts at Part 5: Political Awakening, Chapter 26 -- why it has everything to do with "The DESPOT." Not market competition, or THAAD/Note 7 fire.

Your theory doesn't work in real world timeline where we have to factor in actual execution time. Also it simply doesn't match actual policy history. Xi doesn't get to flip switch and conjure a bunch of domestic phone brands and shift market share within a few quarters. That stuff takes years, not suddenly. Hence on/around. The fact that Samsung peaked right when Xi entered office means Xi was not causative since Xi wouldn't have any time to implement buy domestic policy, which also didn't exist at the time. Market share changes work on multi year lag, for Samsung shares to decline, it requires Xiaomi, Vivo, Oppo etc to have build out manufacturing years prior, i.e. before Xi.

Samsung global sales stagnated few years later and saw some decline in the same period as Huawei was doing double digit global YoY growth - again factor in actual market lag of PRC companies cornering domestic market before going abroad. Then HW got knee capped by export controls. Now maybe HW might not have surpassed Samsung but it's pretty clear Samsung wasn't growing while PRC brands were, while none sanctioned brands continue to chip away at Samsung (i.e. this article).

Either way, claiming there was some anti foreign policy in 2013 simply doesn't comport with reality because we have paperwork of Xi's actual year 1 policies, there wasn't any anti-foreign or buy domestic initiatives. Hence I don't see the relevance of McGee regardless. I think chapter talks about political awakening to PRC business climate not any mobile sector industrial substitution policies (which again, did not exist).

PRC telling Apple to follow PRC laws, i.e. cloud sovereignty isn't anti foreign it's just forcing foreign companies to compete on same requirements as domestic companies like data localization. That happeneing in 2013 was part of broader cybersecurity/ideological work, i.e. the institution work stuff that applied to domestic and foreign companies. Actual MIC2025 related industrial policy didn't happen until years later. Procedurally Xi's first year focused on corruption/CCDI, institutional stuff, there wasn't any industrial policy like MIC until a year later, like 3rd plenum was in December 2013. Xi wasn't going around telling domestic consumers to stop buying Samsung phones or kicking Samsung out of the country. Otherwise Samsung again, wouldn't have freely returned to PRC to partner with PRC ODMs for low end lines that they realize even PRC has cost advantage on vs Vietnam. Incidientally the same cost advantage that made PRC / global consumers buy from affordable PRC brands in the first place.

>> Your theory doesn't work in real world timeline where we have to factor in actual execution time. ... That stuff takes years,

(no "reply" button in your last comment)

Sure, doesn't really matter. I just have to demonstrate that your "local competition" theory in pre-Xi era doesn't hold water and the real world data don't bear that out, which I already have.

Whether Samsung China's sudden sales collapse came 1 day, or 1 year after Xi? not very relevant. That being said, in Apple's case, the Chinese media's coordinated attack started on Consumer Day in March 2013, just a day after Xi became president, but because of Apple's quick response and bold risky bet, suffered no damage. Samsung China's first sales decline since 2009 on the other hand became evident in Q1 2014 and after, or some 3 quarters after Xi. Or roughly equal to a 50% drop in market share and unit sales for the entire year 2014 and more significant drops in subsequent years. So we are talking 4+ years to go from 20% to less than 1%, so there goes your timeline arg out the window, too -- it's plenty time to implement informal anti-market policies and destroy a foreign competitor completely.

Again, this dramatic drop was not seen elsewhere, but in only China, indicating that the problem wasn't inherent to Samsung's product offering, competitiveness, or market. In open markets, such as EU, Samsung maintained a steady ~32+% market share post-Xi and wasn't affected at all by the rise or fall of Huawei, before or after the ban. Samsung EU's market share dipped below 30% in 2021 for the first time in 8+ years, after Huawei's ban which further undermines the narrative that Samsung somehow benefited from it.

E: last comment

Real world data bares out that local competition theory holds. You've demonstrated questionable ability to intrepret data in real world context. Of course it's relevant when Samsung sales collapse happens if it happens in time period where policy changes (which again does not exist) simply could not have effect. The fact that collapse happened when Xi cannot have causative effect means Xi's policies (or lack of) was not responsible. If Xi entered office, made policy to kill Samsung, and 4-5 years later PRC built up domestic mobile players to do so, then sure. But those players already existed and had scaling plans to supplant Samsung domestically pre Xi. Samsung markshare dropping in subsequent years was because domestic PRC brands who built factories pre Xi started doing their natural scaling hence execution years prior to Xi resulted in capturing more marketshare in subsequent years, which entirely comports with timeline. Your theory also simply doesn't comport on the fundmental level that there weren't any anti-market policies in smart phone domain, because it was mature domain where pre Xi PRC competitors were already in place. Anti-market policies was for nacent industries, i.e. MIC2025.

Dramatic drop was seen first in PRC then globally which fits customary trend of PRC players establishing in PRC first then expand globally. We have global data that Samsung sales went from stalling to negative while Huawei scaling as global player to rising after Huawei ban, i.e. Samsung share went from stalling to jumping to 40% in EU after Huawei ban from 30%. Like this is all very well established history, there's no need to entertain alternative / revisionist theories when plenty of market analysis at the time already discussed Huawei eating lunch of Samsung and Apple pre ban while Samsung being primarily benefitiary of HW ban. And again it entire avoids the fact that Samsung went backc to PRC for ODMs for the same reason PRC manufactures displaced Samsung, because PRC had the most cost competitor manufacturers for low-medium end devices that accounted for most sales.

https://counterpointresearch.com/en/insights/samsung-gains-h...

Sure, thx for playing, but really no point in talking in circles.

I find your last cherrypicked "Central and Eastern" EU smartphone data another stroke of desperation/genius, though it is not totally unexpected. Quite revealing!

Reply on news.ycombinator.com