Smartphone subsidy cuts to lift local firms

Although Chinese vendors such as Huawei Technologies Co Ltd, ZTE Corp and Lenovo Group Ltd also heavily rely on carrier channels for handset sales, their profits are less likely to be hurt by subsidy cuts because most of the shipments come from low-end 4G devices.

Liu Jun, senior vice-president of Lenovo, said rapid adoption of 4G devices will offset subsidy cuts in the long run.

Lenovo is the largest contract phone provider for China Mobile and China United Telecommunications Co Ltd (China Unicom) by shipment. About half of the 13 million smartphones made by Lenovo were sold by a carrier service in the second quarter.

Samsung and Apple will face stronger challenges from local vendors after their subsidies are cut, analysts warned.

Huawei, Lenovo and vivo Communication Technology Co Ltd have built a number of devices capable of luring high-end consumers, said James Yan, a senior analyst at IDC.

China's smartphone market changes dramatically	Lenovo sees growth in EMEA markets