"Mobile National Subsidy" meets the Spring Festival: 4 days, nearly 8 million people, 10 million items

Article by Gu Lingyu, Special Contributor to Caijing

Edited by Xie Lirong

As the Spring Festival approaches, the mobile phone industry is shrouded in a hidden anxiety. Whether it is mobile phone manufacturers, distributors, or consumers, their attention is focused on one point: the national subsidy.

Song Ming, a distributor who has been selling mobile phones for 20 years, said that the past week has been the most volatile week in his career. Before January 20, even as the sales peak of the Spring Festival approached, store sales were almost frozen, with consumers holding back their purchases. On January 20, the day when the national subsidy activities launched, customer traffic immediately surged 3-5 times compared to usual. Around 2 PM, Song Ming found that the system page for claiming subsidies even crashed due to the overwhelming number of users, and it wasn't restored until the evening.

According to a notice from the Ministry of Commerce on January 15, starting from January 20, individual consumers purchasing digital products such as mobile phones, tablets, and smartwatches (bands) with a single item price not exceeding 6,000 yuan can enjoy a new purchase subsidy. Each person can receive a subsidy for one item per category, with the subsidy ratio being 15% of the final sales price after deducting all discounts from production, circulation, and mobile operators, with a maximum subsidy of 500 yuan per item. Localities will refine the implementation details based on this plan, which will be implemented nationwide starting January 20.

Public information from the National Development and Reform Commission and the Ministry of Finance shows that this year, the two departments plan to issue 81 billion yuan in ultra-long-term special government bonds to support local governments in implementing the national subsidy for old-for-new activities.

The government is giving money—it's been too long since the extremely mature Chinese mobile phone market has had such a direct stimulus. The national subsidy has stirred the interest of consumers who had no intention of upgrading their phones, and those who originally planned to buy second-hand phones are now considering new ones. According to data released by the Ministry of Commerce on January 24, since the implementation of the new purchase subsidy for mobile phones and other digital products on January 20, 7.92 million consumers have applied for 10.786 million new purchase subsidies.

However, where there is joy, there is also sorrow. How long can the stimulus from the national subsidy last for the mobile phone industry? Will it accelerate the reshuffling of the mobile phone market? Watching the bustling sales scene in his store, Song Ming is worried that consumers' upgrade cycles will not change due to the national subsidy. If sales are good now, will it overdraw future market consumption capacity?

Sprinting at the Start of the Year

"In one night, the sky has fallen for those selling second-hand phones."

This comment has appeared multiple times in discussions about the "national subsidy" on social media platforms. This national subsidy is the first nationwide subsidy for new mobile phone purchases. Many industry insiders and consumers told Caijing that, in terms of promotional scale, this is the most grand consumer subsidy activity they have ever experienced. Not only have various platforms launched prominent government subsidy sections on their homepages, but starting from mid-January, many operators and manufacturers have also been notifying consumers of the national subsidy information via SMS or phone calls.

The second action taken by manufacturers is to reduce prices. Since only mobile phones priced below 6,000 yuan are eligible for subsidies, some manufacturers have started to lower the prices of their new flagship models. For example, the iPhone 16 Plus 128GB and iPhone 16 256GB, which were originally priced at 6,999 yuan, have both been reduced to 5,999 yuan Just within the scope of national subsidy standards, along with the national subsidy of 500 yuan, the final selling price reached 5,499 yuan. It is not surprising to stimulate consumption through subsidies, but the high attention to this national subsidy both inside and outside the industry is inseparable from the demonstration effect achieved by Jiangsu's national subsidy at the end of last year. In December last year, Jiangsu provided a subsidy of 15% of the transaction price for certain mobile phone products, with a maximum discount of 1,500 yuan, which directly boosted local mobile phone sales. At that time, consumers from various places were busy looking for friends in Jiangsu to purchase mobile phones; a unique faction called "Jiangsu National Subsidy Scalper" emerged in the secondary market; even rare long queues formed in front of Apple stores in Jiangsu, with crowds bustling as if in another world.

Zhang Wei is a frontline staff member at Honor. Since December last year, he has been intensively responding to dealers' questions about the national subsidy almost every day, such as "When will there be national-level subsidies?" "Can the intensity be greater than Jiangsu's?" "Is there any way for ineligible dealers to participate in the national subsidy?" "Will the national subsidy become regular?"

Most of the questions Zhang Wei is also unsure about, but he emphasizes one point to every dealer: "Regardless of whether there is or can be participation in the national subsidy, the term 'national subsidy' must be prominently highlighted in the store. The words 'national subsidy' themselves are the basis for attracting customers into the store. The consumer's mindset is that I can do without the national subsidy, but you (the seller) cannot be without it." Manufacturers, channels, and supply chains are all secretly competing. Zhang Wei told Caijing that, according to his understanding, Xiaomi's market share in Jiangsu doubled directly in December last year. He believes that the main reason for this growth is that, unlike other leading mobile phone manufacturers in China, Xiaomi primarily adopts a direct sales model, which is conducive to rapid distribution and price uniformity control. Therefore, after the implementation of the national subsidy policy in Jiangsu, it could quickly respond to the surge in consumers, while others need some reaction time.

He said, "The national subsidy puts considerable pressure on manufacturers' production and inventory. When the policy comes, the manufacturers' production capacity may not keep up, and after this peak period, manufacturers will face overcapacity again."

A person close to Huawei's mobile phone business told Caijing that internal adjustments have been made to product capacity to meet national subsidy demand. For example, under the constraints of chip production scheduling, the production capacity of the Mate 70 pro+, which has a starting price of 8,499 yuan and cannot participate in the national subsidy, has been reduced to allocate excess capacity to the Mate 70 pro, which has a starting price of 5,999 yuan and can participate in the national subsidy.

In other words, the national subsidy is by no means a simple national subsidy where consumers receive money to place orders. With examples from regions like Jiangsu, the potential for consumption driven by the national subsidy has mobilized platforms, manufacturers, dealers, supply chains, and logistics in the mobile phone industry. From regional to national scope, the mobile phone industry has already started sprinting at the beginning of 2025.

Seizing the Market Recovery Window

Currently, mainstream mobile phone brands have successively launched "national subsidy" activities on platforms such as JD.com and Tmall. The way for consumers to participate is "receive subsidy - choose product and place order - complete payment to enjoy subsidy - receive goods and activate on-site." To ensure the genuine and effective distribution of the national subsidy, platforms need to provide services such as on-site signing, activation, and verification for consumers A person from JD.com told Caijing that since this segment has just started, the consumer experience currently needs improvement, with issues such as network delays or inability to verify acceptance occurring frequently during on-site activation. Despite the ongoing problems in the initial implementation, the "national subsidy" has still brought significant momentum to the industry.

Market changes are first reflected in market temperature and mobile phone prices. An OPPO dealer told Caijing that when the state issued a document on January 15 stating that the subsidy cap was only 500 yuan, he felt that the subsidy was too low. For brands like OPPO, vivo, and Honor, there are often different prices online and offline, and it is possible that the offline price is already more than 500 yuan cheaper than the official website price. Moreover, many offline stores of OPPO and vivo belong to small dealers in lower-tier markets that are not qualified to participate in the national subsidy, so he originally thought the driving force for OPPO would not be as strong as for certain brands.

However, he did not expect that the national subsidy would bring extremely high attention, stimulating consumer purchasing desire and store visit rates.

In terms of prices, to meet the entry threshold of 6,000 yuan, various mobile phone manufacturers have begun to lower prices, further stimulating consumption. An industry analyst told Caijing that the price cap for participating in the national subsidy is 6,000 yuan, with a subsidy cap of 500 yuan, indicating that the policy aims to benefit more people and the general consumer. However, the impact of the national subsidy spans the entire industry, not limited to the mid-to-low-end market, and its effect on high-end devices is also evident.

Even if some products cannot be included in the national subsidy range, Caijing found that manufacturers and dealers would still provide substantial subsidies in some stores. For example, a Samsung 2024 flagship model Galaxy S24+ originally priced at 6,999 yuan, after a 1,200 yuan manufacturer discount and a 600 yuan dealer subsidy, is finally priced at only 5,199 yuan.

Some consumers even told Caijing that there are differences in national subsidy policies across regions, and many low-priced products that previously flowed from local national subsidies are circulating in the second-hand market. Even if the discount in some consumers' regions is not substantial, they may still buy cheap products in the second-hand market through "national subsidy scalpers."

Secondly, in terms of sales structure, since the subsidy cap is 500 yuan, if only considering the subsidy strength, purchasing mobile phones priced around 3,333 yuan is the most advantageous (15% of 3,333 yuan is about 500 yuan), while phones priced below 6,000 yuan above this price point have not fully utilized the 15% national subsidy ratio.

Research firm Counterpoint Research released a report stating that models priced between 3,000 and 5,000 yuan are expected to benefit the most. Stimulated by the subsidy bonus, some users who originally planned to purchase a phone later in 2025 may choose to upgrade early, significantly boosting sales of models in the 3,000 to 5,000 yuan price range.

At the same time, Counterpoint Research believes that the subsidy policy is conducive to quickly reducing existing inventory in the market, accelerating consumers' upgrade cycles, and reserving sales space for subsequent new products Previously, the Ministry of Commerce held a special press conference to introduce the new purchase subsidies for digital products such as mobile phones. There are three key pieces of information:

First, the subsidies for mobile phones and three other categories of digital products are purchase subsidies and do not require the exchange of old products;

Second, the subsidies are provided in the form of immediate discounts, allowing consumers to receive discounts whether they purchase through online platforms or offline physical stores;

Finally, the policy supports both domestic and foreign brand products equally, allowing different types of business entities to participate fairly in the purchase subsidy policy.

Li Jialu, Director of the Department of Circulation Development of the Ministry of Commerce, stated that "equal treatment" includes equal treatment for online and offline, for large, medium, and small enterprises, and for domestic and foreign capital.

At the same time, in response to enterprises' concerns about long payment cycles and high financing pressures, the Ministry of Commerce will guide localities to simplify fund audits while ensuring fund safety, encourage the use of advance fund allocation and rolling payment methods, accelerate fund disbursement, and alleviate the financing pressure on enterprises. This information reveals the determination and strength of the policy side to promote the implementation of this national subsidy.

Xu Wenli, Deputy Director of the Electronic Information Department of the Ministry of Industry and Information Technology, stated at the special press conference that implementing purchase subsidies for mobile phones and other electronic products has a significant economic driving effect and a strong pull for domestic industrial upgrading. By the end of 2023, the number of mobile phone users in China is expected to reach 1.727 billion. If 10% of users participate in the mobile phone purchase subsidy activity, it will generate a market scale of hundreds of billions for device upgrades; at the same time, a mobile phone contains thousands of components and parts, and the sales growth driven by the purchase subsidy will also create new increments for the upstream supply chain, driving business growth in related fields.

For consumers, this national subsidy provides tangible purchase discounts, and a demand peak is expected to occur in the short term; for manufacturers, the first quarter will be a critical test of operational capability as they seize the market recovery window.

Whether to participate in the national subsidy may be a matter of life and death

However, the market recovery window may be limited, and research institutions such as Counterpoint Research and IDC have pointed out the need to be wary of the risks of short-term demand being "pulled forward."

Guo Tianxiang, Research Manager at IDC China, told Caijing that the national subsidy will have a certain driving effect, especially in the first half of 2025, but it is also necessary to prevent the premature overdraft of future upgrade demand. Counterpoint Research believes that if this round of subsidies overdrafts subsequent consumer demand, the market may face a significant demand decline after the subsidy period ends, leading to a slowdown in sales growth in the second half of 2025.

Specifically, while the subsidies have led to a short-term explosion in upgrade demand, consumers' upgrade habits and product choices are still primarily driven by their own needs and product innovation, making it difficult for the policy to fundamentally change the current upgrade cycle of the Chinese smartphone market.

In addition, while the subsidy policy has intensified short-term competition, it has not fundamentally changed the market share pattern among major brands. After the subsidies end, market growth will still return to a normalized promotional and product innovation-driven model. It is expected that the nationwide stimulus policies will contribute an additional growth of about 2% to the market in 2025. However, Counterpoint Research still tends to believe that the smartphone shipments in China will not exceed 300 million units in 2025.

Hu Baishan, Executive Vice President of vivo, also expressed optimism about the impact of the national subsidies in a media interview, but at the same time, the internal team has "controlled expectations." According to data released by market research firm Canalys, in 2024, smartphone shipments in mainland China will reach 285 million units, a slight increase of 4% year-on-year, which is lower than the 7% growth rate of global smartphone shipments during the same period. For 2025, Canalys predicts that smartphone shipments in the Chinese market will exceed 290 million units, which shows no significant growth compared to 2024.

However, for some groups, they have already felt the pressure of intensified competition earlier.

Zhang Wei believes that under the impact of national subsidies, market prices will become chaotic in the short term, which is a pressure for some distributors. "There are definitely scalpers in the national subsidies; they have ways to dump goods and drive down secondary market prices. Some brands already have very low offline prices, which will further disrupt prices." Therefore, the distributors he interacts with generally maintain a cautiously optimistic attitude.

Song Ming told Caijing that in order to meet the requirements for participating in the national subsidies, some distributors need to change their tax categories and rates. He calculated that after participating in the national subsidies, his sales volume would increase, but the tax amount would also significantly increase compared to previous calculations, meaning costs would rise as well.

He is also worried about the situation where demand is pulled forward and sales decline. In his view, if the national subsidies are not normalized but are a short-term policy, then sales will definitely drop after the subsidies disappear. If the national subsidies continue to be normalized, then the stretching effect will not be significant. In any case, in the long run, without technological innovation, the current 40-month replacement cycle for consumers will not shorten after this upgrade.

He believes that under the impact of national subsidies, the market share of manufacturers is relatively stable. However, national subsidies will definitely accelerate the reshuffling of the distributor industry. For large distributors, although the money is essentially earned in advance, their mindset may change, making it difficult to calmly plan for the long term. For small distributors, they may not be able to make money at present, and if market demand declines later, their survival situation will become even more difficult. "Similar to when the industry is doing well, they didn't get to eat meat, and in the end, they might only be able to gnaw on bones, without even getting soup."

In fact, for some small distributors, whether they can participate in national subsidies has become a matter of life and death. Not all distributors are qualified to participate in national subsidies. Song Ming stated that one of the qualification conditions for distributors in his region to participate in national subsidies is that their taxable sales reach 5 million yuan per year. This figure is not much for large distributors, but it can be very difficult for small distributors like family-run shops Chen Xin, who opened a store in the eastern provinces, belongs to the category of small dealers who do not meet the requirements for national subsidies. The dealer industry has been consolidating towards the top, making it increasingly difficult for small dealers to operate. This trend has been ongoing for several years. However, seeing the sharp decline in revenue due to the platform and other dealers receiving national subsidies while his own store does not, he is still anxious. He heard that it might be possible for small dealers like himself to participate in national subsidies through the operators' channels, and he hopes that relevant policies can be implemented as soon as possible. "Otherwise, by the time the new people are replaced, there won't be much opportunity left to make money."

(Song Ming, Zhang Wei, and Chen Xin are pseudonyms)

Source: Caijing Magazine Author: Gu Lingyu Original Title: "Mobile National Subsidy Meets Spring Festival: 4 Days, Nearly 8 Million People, 10 Million Items"

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