YANGON/NEW YORK -- A smartphone boom and reforms introduced in 2013 that ended a state phone service monopoly have led to the modernization of Myanmar, despite a relatively immature digital economy.
Since 2013, smartphone giants including Huawei, Apple and Samsung have continued to tussle for a share of this fast-growing market. However, Chinese players have dominated, with Xiaomi, Huawei, and Oppo currently occupying nearly 66% of the country's mobile market, according to the latest Canalys estimates for Q3 2020. Samsung holds a 14% slice.
Myanmar's internet penetration reached 41% in January 2020, with a total of around 22 million people online.
Although there are around 68 million mobile phones in the country, many are traditional cellphones rather than internet-connected smartphones.
Samsung was the only non-Chinese player among Myanmar's top five vendors, according to third-quarter shipments.
Still, "the revolution from 'no phone' to 'smartphone' is quite remarkable, said Marc Einstein, chief analyst at Tokyo-based ICT advisory ITR Corporation. "That's the only country in the world where, in a few years, all of a sudden, everybody has a phone."
With Myanmar society increasingly finding its way online, especially now that the coronavirus pandemic is restricting offline activities, Chinese smartphone giants are targeting its market potential more than ever.
Some 55% of Myanmar's population is under 30, and consumers are notably price-sensitive, a trait not unfamiliar to Chinese companies and one that might give Xiaomi, Huawei and Oppo an advantage against premium brands like Apple and Samsung.
Huawei made strong inroads in the country after 2013 and became the top-selling brand until early 2016, when Xiaomi surpassed it, according to a local news report by Frontier Myanmar, citing local retailers. From 2016 through 2018, Xiaomi and Oppo slowly eroded Huawei's market share. Since then, Xiaomi has been the country's top-seller.
When asked about the reasons behind Huawei's decline, Einstein cited the company's strategic positioning as a premium brand. "For many years, Huawei has tried to stay away from the mass market," he said. "You can tell from some of its latest mobile phones, such as the Mate 30 and Mate 40. They are designed to compete with Samsung and Apple. Also, there's this big question about its Android system. But as the trade war between China and the U.S. is still standing now, people buying a Huawei phone may run the risk of not having access to Google."
While Huawei told KrASIA in an email interview that it is "one of the biggest smartphone vendors" in the country, Beijing-based Xiaomi has captured a leading market share of over 31% as of October, while Huawei was not among the top five in terms of units shipped.
Xiaomi has emulated Apple by placing its major retail outlets in swanky shopping centers in major cities like Yangon and Mandalay, yet its devices are priced significantly lower than iPhones. Also, Xiaomi has positioned its sub brand, Redmi, as one of the most popular brands in the country.
"The price to performance ratio is our most potent weapon in Myanmar," Fuliang Bai, general manager of Xiaomi Myanmar, told KrASIA. The Redmi Note 9 Pro, the brand's latest flagship, retails for 320,000 kyat ($244), compared to over 1 million kyat for various iPhone and other premium devices.
Gross domestic product per capita in Myanmar in 2019 was $1,408, much less than that in some other Southeast Asian markets where Xiaomi is active -- $2,715 in Vietnam, $4,136 in Indonesia and $7,808 in Thailand, according to data from the World Bank. The relative lack of disposable income in Myanmar results in less demand for expensive devices, hence the success of Xiaomi's Redmi products.
"I think Xiaomi is the most popular one compared with other Chinese brands," said a salesperson at Skywards, a local mobile phone retailer located in the Sanchaung township of Yangon. "It is really cheap and they can have a better camera."
The importance of the camera cannot be understated in the minds of Myanmar consumers. With surging access to smartphones and social media, selfies have been catching on, which makes the quality of the camera one of the most important criteria in buying a smartphone.
While Xiaomi's leading position is not under imminent threat, having steadily increased its market share over the last two years, another Chinese player, Oppo, thanks also to its budget brand Realme, is gaining momentum. With 86% year-on-year growth in the third quarter of this year, Realme is capturing the likes of consumers who are looking for budget-friendly deals with a decent camera, with smartphones priced from 139,900 kyat on one of the country's most popular e-commerce site.
The brand, with a 10% slice of the market as of October, is going after the low-end segment. Phoo Moh Moh, a 23-year-old salesperson at a local mobile shop in the Sanchaung township of Yangon, told KrASIA, "From my sales experience, the quality of the smartphone is good and the camera usually has a high resolution."
While Myanmar's mobile market may not contain the region's most lucrative opportunities, the room for growth is immense, with GDP per capita expected to rise more than 55% by 2022. Most consumers live in urban areas, but the proportion of people living in cities was only 30.8% in 2019, leaving many potential consumers outside the reach of traditional sales channels.
The country is developing its infrastructure. A Universal Service Fund was established in 2018 to expand telecommunications services to the most remote regions. The fund, the first of its kind in Myanmar, will use fees collected from the market's main telecom companies to pay for network expansion.
While Chinese smartphone giants may look forward to a 5G future in their home market, Myanmar telcos remain focused on improving 4G connectivity.
"In the coming two to three years, price sensitivity will still play a big role in rural areas," Einstein said. "There will be a lot of Chinese phones priced between $30 to $50. That's what we call the gray market phones [phones that are sold without a bill and warranty]. In the urban sector, more people will go for premium brands like Samsung, Huawei and Apple. Samsung will be quite popular in the coming years as it is not that expensive compared with brands like Apple."
KrASIA is a digital media platform focused on technology-driven businesses and trends across the Asia-Pacific region. KrASIA belongs to 36Kr Global, of which 36Kr is a minority investor. Nikkei has a minority stake in 36Kr.