China Daily

SPREADING WINGS

Domestic phonemaker­s eye global opportunit­ies

- By MA SI masi@chinadaily.com.cn

We aim to increase the contributi­on of Honor’s overseas revenue to the total revenue from 15 percent in 2017 to 50 percent by 2020.” Zhao Ming, president of Honor, the second brand of Huawei

For most people in the northern hemisphere, March means spring and warmer temperatur­es on their way.

For Chinese smartphone makers, it underlies a “freezing cold winter” that is coming.

A recent report shows that the world’s largest smartphone market, China, suffered its first-ever decline in smartphone sales in 2017. According to market research company Canalys, smartphone shipments dropped by 4 percent from 2016, to 459 million units last year.

The Chinese market, which is driven by replacemen­t users, witnessed one of its worst year-on-year performanc­es in the fourth quarter of 2017, signaling that local consumers have already upgraded their handsets, and are satisfied with what they own.

Xiang Ligang, CEO of telecoms industry website Cctime, said the declining trend is the main theme of 2018, which means the “freezing cold winter” for domestic smartphone vendors has arrived.

Against this backdrop, Chinese industry players are making an unpreceden­ted push to pursue opportunit­ies abroad. Initially focusing on the Southeast Asian market, their vision now extends further into European and American countries, where they face bigger competitio­n from foreign rivals such as Apple Inc and Samsung Electronic­s Co Ltd.

Huawei Technologi­es Co Ltd, the world’s third largest smartphone vendor, is accelerati­ng steps to grow the internatio­nal appeal of its second brand Honor, which chiefly targets young consumers.

Zhao Ming, president of Honor, said: “We aim to increase the contributi­on of Honor’s overseas revenue to the total revenue from 15 percent in 2017 to 50 percent by 2020.”

Honor is designed to complement the Huawei-branded smartphone­s, which cater to business profession­als.

Honor has mapped out its major target areas, including the United States, Europe, Mexico, Africa and Turkey.

To support its expansion, Huawei has taken incentive measures including awarding excellent Honor employees with bonuses as much as 1 million yuan ($158,000).

“The Honor team is set to conquer the Himalayas, the world’s highest mountain range, from the northern-side route,” said Ren Zhengfei, founder of Huawei, in a public letter summing up the challenge the company faces as it expands overseas.

The move came as Honor’s archrival Xiaomi Corp ramped up resources to expand its overseas presence. The Beijing-based company opened its first two authorized physical stores in Spain — its first step into Western Europe — in November 2017.

Sitting on a recent $1 billion loan and armed with more internatio­nal patents, Xiaomi, which was founded in 2010, is itching for global marketing scraps.

In the fourth quarter of 2017, it replaced Samsung as the top smartphone vendor in India, the world’s fastest-growing major smartphone market. Xiaomi achieved that per- formance within just three years.

Lin Bin, president of Xiaomi, said if the overseas markets maintain a strong momentum, the company will sell more smartphone­s in foreign countries than in China by 2020 or 2021.

Oppo, which vanquished Apple in just a few years to become No 2 in its home market China, is taking a similar approach. It is targeting Japan for its next conquest, as the company’s smartphone­s are best known for photo-taking functions, which are supposed to resonate well with Japan’s beauty-savvy women users.

The company plans to hire 700 to 800 employees in Japan in the next two years for engineerin­g, marketing and sales positions. Oppo may also open a retail flagship store in Tokyo, said Deng Yuchen, chief of Oppo’s Japan operations, in an interview with Bloomberg.

The declining Chinese market will have a detrimenta­l impact on those Chinese vendors who rely too heavily on their home market, Canalys Research analyst Rushabh Doshi warned in a research note.

“With the market continuing to shrink in China, smartphone vendors must contend with slower growth for their smartphone business as they begin to expand in other countries,” Doshi said, adding that high marketing and operation costs in foreign countries would be a concern.

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 ?? XINHUA ?? Young women demonstrat­e new mobile phone models released in Malaysia by China’s Meizu Telecom Equipment Co Ltd in Kuala Lumpur.
XINHUA Young women demonstrat­e new mobile phone models released in Malaysia by China’s Meizu Telecom Equipment Co Ltd in Kuala Lumpur.

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