@Sheetal.Pandey, I don't think Samsung would be lagging behind either. But the fact is that Samsung has put itself in a much tougher spot as it has to spend more resources to fight against the local Chinese smartphone vendors at every price point.
The way young generation in China uses phones, smartphones market is going to grow bigger and bigger. But there will be tough competition between APple and Samsung. Would be surprised if Samsung is lagging behind.
Recently Chinese brand Xiaomi's Mi 3 mobile phone was launched in India. This mobile has excellent features matching all high-end phones. Mi 3 uses Qualcomm Snapdragon 800 8274AB 2.3GHz processor, Adreno 330 450MHz GPU, 2GB LPDDR3 RAM!! The display also reasonably matches any high-end phone. The cost is just Rs. 13,999/- in Inida (~USD 233).
There was a over-whelming response for grabing this phone. Two days back the website of one of the popular online shopping company Flipkart crashed due to heavy traffic due to more than 100K customers booking this phone in a short span of time.
I agree with your assessment as to how nutty some consumers in China could get over the high-end brands. No wonder Apple has been recruiting so many executives from high-end brandname companies over the last 12 months...
As you said, brand is a major factor in the choice of a phone in China. I don't think it's about money, it makes me think of Louis Vuitton bags and crazyness about them.
Now cost is very different for smartphones of equal performance/design/apps... I have a Xiaomi mi2s I paid less than 200€ and it's crazy how cheap it is. Apple made us think high-range is expensive, well it's not anymore.