This decline was due to various factors, such as people buying fewer new phones.

Thanks to innovation in technology, such as elevating selfie camera and reverse wireless charging, domestic mobile phones have acquired a formidable reputation and popularity in the market, especially products by leading enterprises. But they still have a long way to go.

Research and development (R&D) and manufacture of smartphones are an integrated industry, and this includes the software, semiconductor, camera and other relevent industries. However, the supply chain has failed to meet the needs of enterprises and the market. The most direct and effective way to increase companies' share in the market is to improve their R&D capability and produce more services like mobile applications.

All manufacturers agree on this. They also agree that it is necessary to win the high-end market, which will bring in higher profits. However, selling cheap phones has been the hallmark of Chinese smartphone enterprises for a long time. So to make their profits grow, domestic mobile phones need to not only improve their hardware and brand premium, but also create an ecosystem for an intelligent society using extended services.

Fortunately, the top domestic smartphone companies have realized this and made adjustments. Today, they not only provide phones but also various services and the phones can be connected to more devices. The arrival of 5G also requires mobile phone manufacturers to upgrade.

Smartphone manufacturers need to improve their capability and adjust better to the digital ecosystem. They also need to coordinate with related industries.

(This is an edited excerpt of an article originally published in China Financial Weekly on April 1)