This study is trying to find competitive advantages of Chinese smartphone industry from the concept of frugal innovation. Chinese companies are recognized to obvious technology gap with global players, however are increasing the market share in their homeland. Frugal innovations are generating in Chinese smartphone industry, considering that do not catch up the advanced technology and make up the new products. To analysis the competitive advantages of Chinese smartphone, we investigated the hardware, software and marketing strategy of them. First, almost of all parts using Chinese smartphone was provided by overseas Chinese companies and local parts companies. Finding the differences of hardware system between Chinese smartphones was very difficult because they are assembled with almost same modules produced at same plant. Second, in case of software they also used global operating systems, however putted relatively large amount of R&D investment to developing applications which may be welcomed by Chinese users. Third, Chinese companies was revealed that having some characterized sales strategies, although no one developed unique strategy with technology basis. In sum, the competitive advantages of Chinese smartphone industry are resulted by strategic alliance with overseas Chinese parts and developing applications based on huge home market. Frugal innovation of Chinese smartphone industry can make an obvious performance in Chinese land, however it would be unclear that can applied other market because this innovations are specialized in China.