The upsurge of independent design house (IDH) in China

The upsurge of independent design house (IDH) in China Feb.11 – Global vendors shipped 427.6 million smartphones to the Chinese mainland in 2015, representing a disappointing 2 percent year-on-year growth, which was the slowest on record, the rising IDHs in China explains something closely linked to the Smartphone industry, there is an upsurge of independent design houses (IDHs) in China.

What is IDH? –  Within the structure of the mobile handset industry, an independent design house (IDH) is a firm that specializes in the development of handsets on a contract basis. The most capable IDHs are able to undertake the entire process of development, from product definition to certification acquisition. More recently, many IDHs have taken on procurement of components, management of contract manufacturing, and shipment of completed handsets (or semi-assembled kits) to customers. On the other hand, there are numerous minuscule IDHs that undertake only one or two design processes (e.g., exterior design or mechanical design) for handset manufacturers or that do so for other IDHs as subcontractors.

Smartphone market in China growth – In China smartphone market, controlling more than a 15 percent market share last year, Beijing-based handset maker Xiaomi Corp edged out rival Huawei Technologies Co Ltd to claim the top spot. Shenzhen-based Huawei recorded a 14.7 percent market share while Apple Inc., the No 3, had 12.5 percent. As local vendors consolidated their dominance of the market, Apple and South Korean giant Samsung Electronics Co Ltd were the only surviving overseas majors. The fourth quarter was one of the best-performing periods for handset vendors due to the release of new products and the approaching holiday season boosting sales. A total of 113.6 million devices were shipped between October and December, a lukewarm 5 percent jump compared to a year earlier.

The Upsurge of IDHs in China – Most IDHs in China were established either by Chinese engineers who had acquitted technological knowledge about handset development through job experience in TNGs, the most competent Chinese telecom manufactures such as ZTE, or electronic device distributors who had market knowledge and connections with engineers. The growth of China local IDHs had virtually replaced their foreign rivals businesses as major players in the design outsourcing business for local manufacturers. Estimates suggest that almost about 50% of the handsets shipped in China by local companies were designed by China IDHs.

Future perspective of shipment growth in China 2016 – China research insiders estimated that shipment growth in 2016 is likely to stand at 5 to 7 percent year-on-year, thanks to the telecom carriers’ attempts to introduce new technologies and customers’ growing appetite for quality devices. In addition, China Mobile Ltd pushing devices compatible with Voiceover LTE technology will be realized in 2016. The VoLTE technology allows traditional voice services to be transmitted along with other Internet data. Once the carriers adopt this technology, smartphone users will no longer need to pay for voice calls by duration, but by how much online traffic the call consumed.

Huawei and Xiaomi have announced plans to introduce next-generation devices with new features, better quality and potentially, a higher price. Huawei’s handset unit, also showed off the device endured the frigid weather in North China while iPhones stopped working due to the extreme temperatures. Xiaomi, the company’s 2016 flagship to be released this month, will “crash” competitors in terms of design, performance and quality. Huawei shipped more than 100 million handsets globally last year, and more than 70 percent were sold in China. The company is also eyeing Apple and Samsung’s share in the premium-end market, where the retail price for a device is well above $600. Smartphone vendors to come up with all the right numbers. For the List of Local Independent Design Houses (IDHs) in China available upon request, please contact with DCCC, or email to: info@dccchina.org