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Sales of domestic smartphones fell by 2 times in a year. They can't compete on price with Chinese imports

BQ and Inoi are one of the popular brands of Russian smartphones

In Russia, in the first quarter of 2023, 46,900 smartphones of Russian brands were sold, which is 53% less than in the same period last year, when 99,300 domestic gadgets were sold. This follows from the statistics of Marvel Distribution (available from Vedomosti). The sharp decline in sales is confirmed by Ozon data: 47% fewer Russian smartphones were sold through the marketplace from January to March than in the first three months of 2022. The most popular brands, according to both companies, are BQ and Inoi.

Most Russian smartphones are budget devices. At this stage, buyers have already covered their basic needs for inexpensive devices and are now starting to purchase a second or a third smartphone at a higher level or switching models with advanced functionality. Therefore, Russian buyers prefer foreign brands that are more widely represented on the shelves,” explains Artur Makhlayuk, Business Analyst at F+ tech-Marvel Group.

The Russian smartphone market is represented by a small number of brands, so their share of total sales is small, he continues. Last year they occupied 1.4% of the market, this year - 0.6%. According to Marvel Distribution, the leaders in the number of smartphones sold among Russian brands this year are BQ-Mobile (32,800 gadgets), Inoi (8700), Black Fox (3900), Vertex (800). Moreover, the top has not changed year by year, Makhlaiuk added.

In January - March 2023, Russian brands accounted for about 0.5% of all piece sales of smartphones, a year earlier it was 1%, i.e. the demand for them has halved, Vedomosti's source confirms on one of the online platforms. Basically, these are devices priced up to 5,000 rubles, and the segment itself has decreased over the year and demand has been redistributed to more expensive devices, where Chinese brands are widely represented, the source said.

On Wildberries, buyers show interest in gadgets from Russian brands (for example, BQ, Inoi, Digma, etc.), but most often users choose smartphones from Asian brands, such as Xiaomi, Realme, Infinix, OPPO, and Poco, due to a wider range such products, a spokesman for the site said.

In the Tele2 network, of the notable brands with clearly Russian roots, only BQ and Black Fox are represented. In the first quarter of 2023, their total sales decreased slightly - within 2% year-on-year, a representative of the operator said. At the same time, the total share of sales of these brands in pieces in Tele2 retail is less than 5%. Beeline retail does not sell domestic smartphones. MTS and Megafon refrained from commenting.

An F+ tech representative said that F+ smartphones were delivered to the Russian Federation at the end of 2022 and there are no statistics on them. In addition, F + tech smartphones are supplied to the corporate market, they cannot be taken into account in retail, the company representative added. The Russian brand of smartphones and push-button phones of the Chinese assembly Inoi is now positioning itself as Estonian, Kommersant wrote in October last year.

Vedomosti sent a request to Inoi and BQ.

Experts also note that Russian smartphones in general are more likely to lose competition to Chinese ones. The decrease in interest in domestic brands may be due to the fact that competition in the low-price segment has intensified, says Mikhail Burmistrov, CEO of Infoline Analytics. The position of Chinese brands has been strengthened due to the growth of their recognition, which has allowed them to become more attractive, he said.

If you look at the offer of domestic brands, it becomes obvious that you cannot replace the iPhone with them, Sergey Vilyanov, an analyst at the Fintech Lab accelerator, agrees. They can compete only with budget solutions from Chinese and Indian brands that have not left the Russian market and even strengthened the offer, he adds. On "Yandex. Market" you can find six models of all domestic brands, taken together, and in large retail (DNS, Online trade) they simply do not exist, the analyst draws attention.

 “Domestic brands are now fighting for the opportunity to make the best price offer in the budget and ultra-budget segments. It is very difficult and unprofitable, and the marginality of the business tends to be zero. To improve demand, two options are possible: entering the middle price segment with a simultaneous improvement in the characteristics and quality of goods, or closing the Russian market for foreign players,” says Vilyanov. The way out may be the forced purchase of domestic by all state institutions, but this is already a non-market story, he adds.

In fact, devices sold under domestic brands have the technical characteristics of previous years and are less attractive in price compared to Chinese counterparts, Denis Kuskov, CEO of Telecom Daily, believes. Basically, domestic smartphones can be used as a second device for limited use - in cases where the risk of damage is high, and the price is a key factor, suggests Burmistrov.

According to Burmistrov's forecasts, in 2023 the demand for Russian smartphones will not exceed 200,000 units. This year, as in the previous one, there will be no prerequisites for a breakthrough in sales of Russian smartphones, Kuskov concluded.

Source: https://www.vedomosti.ru/technology/articles/2023/04/27/972757-prodazhi-otechestvennih-smartfonov-upali-v-2-raza?utm_campaign=newspaper_27_4_2023&utm_medium=email&utm_source=vedomosti