When we hear the word Apple or Samsung, one thing that comes to our mind is, “great, sophisticated devices that everybody is dreaming to own one day and only the rich actually owns them”. Apple and Samsung dominates the market for high – end pricey smartphones but on the other end of the chain lies some other smartphone brands that produce nearly high – end but lower priced smartphones and they sale even more than Apple and Samsung.
If Apple can enjoy high market sales over the years and in Countries like United states and the UK, their story is a little bit different when it comes to China and so many other Countries as they can barely take a breathe of fresh air these days.
Apple’s CEO, Tim Cook has predicted in 2013 that China would become Apple’s biggest market. But he was totally wrong, iPhone sales there have stagnated in China. It was reported that in the third quarter of 2016 its market share fell to 7.1%, down from 11.4%.
This catastrophe was engineered by the miraculous rise of a brand nobody expected to make it to the top.
Living in Dongguan, a Chinese city near Hong Kong, where cheap and high – end technology are birthed. Oppo as a smartphone brand produces 50million smartphones yearly. The company started out in 2004 by 22 years old China’s BBK electronics but it now runs independently.
On the other hand, its sister company, Vivo is also on the fast rise, started 2009. Also an offspring of the Chinese BBK electronics. The company focuses on its smartphones’ camera, a major selling point in a selfie-obsessed China. Celebrity endorsements and its sponsorship of the NBA in China have helped propel the brand to greatness.
The two brands, Oppo and ViVO just like so many other Chinese smartphone makers, produce cheap and cheerful phones.
Even with Apple’s sophisticated iPhone series and its big name and popularity, they lost the Chinese market to Oppo on June 2016 when Oppo released their Oppo R9 which costs just $400. Vivo on the other hand which targets the younger Chinese consumers with lower prices is also coming up gradually.
This is so amazing, because, just two years ago, this two brands were begging to be among top 5 Chinese smartphone manufacturers but today they are topping the chart.
How Oppo and Vivo Achieved Great Heights
This is a story of giving to the people what they actually need. About 6 years ago, Xiaomi was sitting on top of the Chinese market comfortably. With their “asset-light” strategy, which means Xiaomi relied almost on selling its phones online. This worked out for them when the overall market for smartphones was growing, and the richest cities, with the largest number of tech-aware consumers, were booming. Xiaomi was then valued at some $46bn, but its fortunes in China have plunged drastically.
This is because smartphone brand’s growth have shifted from the high – class individuals living in big Cities to the middle – class living in smaller cities and this people are less experienced with smartphones and will rather go for a lower priced smartphone rather than an Apple iPhone, and instead of buying their phones from an online store, they will like to see, feel and compare their phones before paying for it. This is were Oppo knocked everybody out.
Oppo and Vivo saw this differences before time, with a strategy strategy masterminded by Duan Yongping, founder of BBK although retired but still have a very big influence in the company and its offspring. Oppo invested heavily in bricks-and-mortar retail distribution in lower-tier cities. Today, it was reported that the firm’s phones are sold at some 200,000 retail outlets across the mainland, which gives its salesmen the chance to coddle customers and nudge them to buy their lower priced phones.
In addition, Oppo solidified its victory by incentivising its physical retailers. It shares some of its profits with local stores using a sophisticated system of subsidies that vary by model and season. One retailer living in a small town in Sichuan reported that, although he sells many brands of smartphones, OPPO’s generous subsidies make him extra-eager to peddle its wares.
According to a new report from IDC which found that this strategy propelled Oppo’s annual sales in China to 78.4 million, up 122%, and put it first on the list, while Vivo sat slightly lower in third with 69.2 million shipments, up 97 percent. Between the two brands you will find Huawei, with 76.6 million shipments. Apple and Xiaomi round out the top five.
Outside China, Oppo is already a force in India and is in second place in South-East Asia behind Samsung. Vivo is fighting with Xiaomi for space behind Samsung in a race for second place in India’s smartphone market.
Huawei is another force to reckon with. The network-equipment giant sold an estimated $26.5 billion worth of phones in 2016, or 140 million handsets. It’s the only Chinese phonemaker whose devices are generally seen as being on par with Samsung’s in quality—which helps explain its strong recent growth in Europe.
Apple is not getting the struggle as easy as it used to be. The competition is tough, brands you never thought they can raise a single hair from your legs are already pulling your pants down.
Let’s see what happens in the next 5 years. Sure, most of all the Chinese brands you hear about today will soon be wizzled out and forced to shut down, if Oppo and Vivo can survive the tide until then, they might come out to be a huge force in the global smartphone manufacturer’s struggle.