China is not only the world’s biggest smartphone market by sales volume, it is also the most unique. Dominated by homegrown brands Huawei, Oppo, Vivo and Xiaomi, which together account for more than 65% of the market, China represents the new frontier for smartphone brands.
As Samsung languishes in China (its market share dropped to just 2% in October) and Apple rallies (achieving 11% share last year thanks to strong sales of the iPhone 7 Plus) local heroes Huawei and Oppo have flourished, increasing sales and brand awareness throughout the country.
As the market in China has rapidly matured, so too have local players which have moved beyond offering cheap handsets to sell competitive and compelling products, according to Jason Lee, a senior analyst at market research company CMR.
“Initially, local brands were competing against global players like Samsung and Apple by offering much lower retail prices. However, they are now becoming much stronger at providing innovation in technology, such as AI, 5G, camera capability, as well as different functions and attractive design to get better user experience.”
The brands have also invested in targeted marketing activity in a bid to stand out in one of the most competitive markets in the world. Huawei has positioned its brand as market leader, targeting urban markets, business people and high income earners by sprinkling its reliable operating system and overall performance through traditional advertising campaigns.
Meanwhile, Oppo and Vivo have pursued the youth market through entertainment sponsorships and cross promotions with fashion brands, promoting the brands’ colourful phones, cameras and photography features. Only Xiaomi has positioned itself as a value brand, targeting lower income earners and relying on word-of-mouth popularity.
These techniques, along with the latest technology (often they are more advanced, with Huawei phones, for example, featuring dual cameras long before the iPhone) and prices that can be as low as a quarter of an Apple or Samsung equivelent, has helped Chinese brands make significant inroads in international markets.
Oppo, Vivo and Xiaomi are all investing heavily in India, where Xiaomi has secured 20% market share and Oppo sales are expected to double off the back of sponsorship deals with stars from the worlds of cricket and Bollywood. All of these brands are also focused on southeast Asia, where markets such as Indonesia are providing huge growth opportunities.
Huawei remains the strongest candidate for superbrand status. In June last year, the brand surpassed Apple’s global smartphone sales for the first time to rank second to Samsung.
The move, which came ahead of the new iPhone releases, was short lived. But it did reveal the potential threat Huawei poses to Apple and Samsung on the global stage.
“Huawei is the only local player in China that is manufacturing its own smartphone chips,” says Lee. “By becoming active in developing its own tech innovation, Huawei is improving its bargaining power on the upper stream. This is the core advantage for Huawei to compete against Samsung or Apple on the global stage.”
While Huawei remains strong in China, Europe, the Middle East and South America, it still faces significant challenges in the US and south-east Asia.
The reported collapse of Huawei’s distribution deal with AT&T in January dealt a blow to the brand’s US expansion plans. The brand countered this setback by enlisting actress Gal Gadot – Wonder Woman herself – as a new spokesperson.
Gadot, who was the highest-grossing actress in the world last year, has signed on as chief experience officer to “help shape the company’s brand experiences and play an active role in … providing ongoing ideas to inform how Huawei will bring the best experiences to its consumers”. She will also join Scarlett Johansson in advertising the brand globally as Huawei seeks to usurp the smartphone heavyweights and secure the number one position.
Huawei’s US distribution issues also highlight the challenges China’s smartphone brands still face if they want to achieve global domination.
“At this stage, the local brands have posed a great threat to Samsung and Apple. However, in the high-end segment of the smartphone market (phones priced over $600), the threat is still small both in China and globally.
“I think that, when the Chinese brands can provide convincing and powerful high-end mobile phones, Samsung and Apple will feel a big threat. The only way to achieve this target is to accelerate the process of technology innovation,” says Lee.
This feature first appeared in The Drum's March issue, which focused on mobile technology.