A GfK report on Vietnam’s mobile phone market in the first half of the year showed that the market share of low-cost products dropped from 24.2% in the same period of last year to 17%.
The products priced at VND2-3 million have also seen market share drop from 19.7% to 17.4%.
The figures were for both feature and smartphones.
High-end products have all seen market share increase rapidly. Even products priced at VND8-VND10 million which sold slowly in the last few years unexpectedly doubled compared with 2015.
The information is good news for mobile phone manufacturers. However, a question has been raised about why low-cost products are disappearing from Vietnam. Do Vietnamese consumers have higher salaries or have manufacturers given up low-cost products?
The representatives from The Gioi Di Dong and FPT Shop, the largest mobile phone distribution chains in Vietnam, both have reported stable sales of low-cost products.
A retailer in Ho Chi Minh City said there were sale promotion programs launched last year, under which consumers could buy products on installments with interest rate of 0%.
“Instead of spending small sums of money to buy low-cost products, consumers would rather buy popular products at VND3-VND4 million and pay for them on installments,” he said.
Samsung and Oppo are the two phone manufacturers running the most attractive sale promotions applied for products priced at VND3-VND4 million and VND6 million or more.
Meanwhile, Hoang Thuy Linh from Mobiistar, a Vietnamese brand, commented that low-cost products are disappearing because manufacturers don’t want to continue production of them.
She said that since the profit from products was not attractive enough, manufacturers were shifting to focus on VND3-VND6 million products.
Some distributors also think that Samsung, Oppo, Motorola, HTC and Microsoft still make low-cost products to satisfy demand, but they will give them up because the models cannot bring high profits.
However, Truong Huu Dung, a veteran phone trader in Ho Chi Minh City, commented that GfK’s statistics only show a part of the market, because it cannot cover unnamed products dominating rural and mountainous markets.
He noted that products with Arbutus, Forme and Hot Wav Bluoo brands have been selling in these markets. However, the brands are not well known and are not considered by GfK.