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Case studies keep mobile phone accessory makers ahead of the game

The mainland mobile phone accessory market is now worth more than Rmb10 million, with manufacturers and distributors ever on the lookout for new trends and upgrades, with sector expecting windfall from impending G4 arrival.

Photo: Despicably popular: The Minions phone case coasted on movie success.
Despicably popular: The Minions phone case coasted on movie success.

With the ubiquity of smartphones and the growing popularity of 4G technology across the mainland, a new wave of upgrades is creating fresh opportunities for the country's mobile phone accessory suppliers.

Mainland consumers purchased some 360 million smartphones 2013, with the number expected to exceed 450 million in 2014, according to IDC's China Quarterly Mobile Phone Tracker. On the basis of an average price of Rmb30 for a case for each phone, a lucrative market worth in excess of Rmb10 billion has now opened up.

While the primary purpose of a phone case is to protect a handset from accidental damage, smartphone owners, particularly those in the youth sector, also accessorise their phones to make a personal statement. Aside from cases, a number of other add-ons – including amplifiers, battery chargers, coin holders, cameras and even cigarette lighters – are also proving increasingly popular.

Multi-function mobile phone cases are particularly valued by young male consumers, especially tech-savvy individuals looking to enhance their handset's capabilities. This has created a market for phone cases tailored to specific customisations.

Cases with a rechargeable external battery for the iPhone, for instance, sell particularly well because of the model's typical high levels of power consumption and the fact its built-in battery cannot be exchanged. With photography now one of the most popular applications for mobile phones, cases featuring high quality external cameras are also widely favoured. Some cases have a three-in-one rotatable lens set, including fisheye, wide angle and a telephoto capability, making them popular with adherents of the "selfie". They are compact, easy to use and often have the craftsmanship of high-end products. Meanwhile, the Swiss Army knife-style accessories and cigarette lighter add-ons, both particularly by favoured by young males, are also selling well.

Despite the size of the user base, a number of multi-function mobile phone cases, often those with a long design and production cycle and coming at the costlier end of the price spectrum, have yet to find a market. On such example are those cases that feature high quality craftsman-style optical lenses. These can retail for up to Rmb2,000, making them nearly as expensive as some of the older iPhone models.

Staying ahead of the fashion

Fashionable mobile phone cases are primarily targetted at women aged between 18 and 24 years old. Many of these cases do not have add-on features and are, simply, relatively cheap mainstream products. They, typically, have a lifespan of about three months, giving them a similar disposability to many clothing items.

The core competitive element of fashionable mobile phone cases is their appearance and this entails sticking to a design that's clearly "a hit." When the animated film Despicable Me 2 was released in China, the "Minions" series of phone cases had already been available for several months. According to the owner of Xiaowai, a Beijing-based mobile phone accessory shop, these proved best-sellers on the back of the significant promotion given to the movie across the mainland.

Photos: In-store and on-line: mobile accessories are a must-have.
In-store and on-line: mobile accessories are a must-have.

According to industry consensus, products priced at less than Rmb30 can be deemed to be at the low-end of the sector, Rmb30-100 items are mid-range, while those costing Rmb100 (or more) are decidedly high-end. However, the cost of materials – whether silicone or thermoplastic polyurethane (TPU) – is relatively low and manufacturing is relatively cheap. The profit margin on a silicone case, sold for Rmb100, is said to be in the 100%-300% range, with distributors generally securing a profit of around 30% per unit.

Keeping ahead of the competition

Staying in tune with the latest developments in the smartphone market is an absolute necessity for peripheral makers looking to keep ahead of their competitors. Thanks to its relatively stable and minimalist design – as well as its huge sales across the mainland – the iPhone is generally seen as the best smartphone to accessorise.

About 200 million iPhones were sold in China in 2013, but the cases made for the entire range require only two variants. For those case makers working on Apple-related products, there is the lure of the least outlay for the widest market uptake. In addition, Apple, as a publicly-listed company, gives regular updates on its production plans, ensuring accessory makers have sufficient lead time to meet the needs of any upgrades.

Well before June 2010, when Apple announced the launch of its iPhone 4, many accessory suppliers were already prepared. Less than two months after the launch, a full range of peripheral cases were available on the market. As Apple products have sold so well and for so long, many accessory manufacturers and distributors have benefitted hugely from the phone makers' success.

More recently, sales of Samsung smartphones have begun to take off in China. Although Samsung's overall sales level is lower than that of Apple, it boasts the largest overall share of the mobile phone market. In 2013, smartphone users accounted for nearly 50% of the total mobile phone market worldwide. As 4G technology is set to be introduced in China, another surge in mobile phone sales is expected.

Online channels dominate sales

Despite the stylish appearance of many mobile phone accessory stores, most consumers prefer to shop online. There are close to 1,000 online shops specialising in mobile phone accessories on Taobao.com. Several B2C websites – notably Eachnet.com and JD.com – are also major outlets for mobile phones add-ons. A number of mobile phone accessory brands, such as GGMM, also advertise on Sina Weibo and WeChat, as well as monitoring customer feedback via their websites as a guide to future product trends.

Photo: Focussing on future growth: a range of add-on lenses.
Focussing on future growth: a range of add-on lenses.

Manufacturers have been quick to embrace this change, with e-commerce players now established as major customers for many mobile phone case wholesalers. In signs of the growing convergence between on- and off-line sales, the owner of one high street mobile phone accessory shop also acknowledges that online sales are now a vital part of his income.

Ren Yuan, Special Correspondent, Beijing

Content provided by Picture: HKTDC Research
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