Can Chi­nese smart­phone mak­ers win Europe?

Tech firms eye ma­ture mar­ket in bid to push pre­mium prod­ucts

Global Times - Weekend - - TECH - By Li Xuan­min

Af­ter win­ning the In­dian and South­east Asian mar­kets, Chi­nese smart­phone mak­ers are now mak­ing ag­gres­sive in­roads into Europe, in­clud­ing the UK, Spain, Italy, Rus­sia and France.

Ac­cord­ing to the lat­est re­port re­leased by re­search in­sti­tute Coun­ter­point Re­search, Huawei’s mar­ket share in Europe rose to 22 per­cent in the third quar­ter of 2018, up from 13 per­cent in the third quar­ter last year. The brand now ranks No.2 in terms of mar­ket share in Europe, trail­ing Sam­sung’s 31 per­cent but pip­ping Ap­ple’s 19 per­cent.

Other Chi­nese smart­phones in the top five in­clude ZTE and Xiaomi, with a mar­ket share in Europe of 5 per­cent and 4 per­cent, re­spec­tively. Xiaomi ap­peared in the top five list for the first time.

For do­mes­tic hand­set-mak­ers, gain­ing recognition in a much more de­vel­oped mar­ket, which gave birth to global tele­com gi­ants such as Nokia and Eric­s­son is not an easy task, as Euro­pean con­sumers are more se­lec­tive and de­mand more prod­uct func­tions. But the re­wards are ob­vi­ous – they can reap pro­por­tion­ately higher prof­its by sell­ing pre­mium smart­phone mod­els.

The av­er­age sales unit price of smart­phone in West­ern Europe is $446.7, sec­ond only to the North Amer­i­can mar­ket, ac­cord­ing to a sur­vey by GFK in Jan­uary.

More im­por­tantly, ven­tur­ing into one of the world’s eco­nomic pow­er­houses would also help Chi­nese smart­phone com­pa­nies es­tab­lish high-end global brand im­ages that are dras­ti­cally dif­fer­ent from the ones in In­dia and South­east Asia, an­a­lysts pointed out.

“Our Asian neigh­bors’ mar­kets are just like the Chi­nese mar­ket a decade ago… there is plenty of room for fu­ture growth but only cheap smart­phones are sell­ing well, which some­how im­pedes smart­phone pro­duc­ers’ long-term de­vel­op­ment,” said Liu Dingding, a Bei­jing-based in­de­pen­dent in­dus­try

an­a­lyst. “On the con­trary, gain­ing a sta­ble foothold in the Euro­pean mar­ket bodes well for their suc­cess­ful global im­age.”

So far, all Chi­nese smart­phone ven­dors have ramped up ex­pan­sion into Europe since the begin­ning of 2018, look­ing to re­peat their suc­cess in a ma­ture mar­ket. Ven­dors like Xiaomi, Oppo and Vivo are new to the mar­ket, while oth­ers like OnePlus and Huawei have en­tered the mar­ket sev­eral years ago, part­ner­ing with lo­cal car­ri­ers to scoop up lo­cal mar­ket share.

Strong start

Rid­ing the mo­men­tum, Xiaomi has opened re­tail stores in ma­jor Euro­pean economies in­clud­ing Spain, France and Italy since May. And in the lat­est push into a Euro­pean mar­ket, it opened its first Mi Store in Lon­don in Novem­ber.

The com­pany seems off to a strong start, as lo­cal con­sumers were re­port­edly lin­ing up out­side Xiaomi’s out­lets in Europe, rush­ing to pur­chase its gad­gets. Xiaomi CEO Lei Jun also said in a Weibo post in May that the brand has posted a stag­ger­ing 999 per­cent growth rate in the Euro­pean mar­ket to date.

In ad­di­tion to Xiaomi, other Chi­nese ven­dors such as Vivo and Oppo are also new­com­ers to Europe.

On June 19, Oppo launched its flag­ship Find X smart­phone – also the com­pany’s first pre­mium phone since 2014 – at the Lou­vre in Paris. Cost­ing 999 eu­ros and avail­able in France, Italy, Spain and the Nether­lands, the Find X model sig­nals the Chi­nese elec­tronic com­pany’s am­bi­tion to march into the Euro­pean mar­ket and com­pete head-to­head with top-tier hand­set mak­ers.

The launch event gen­er­ated buzz as Oppo also un­veiled a more pre­mium ver­sion in col­lab­o­ra­tion with Ital­ian lux­ury car brand Lamborghini, priced at 1,699 eu­ros.

“The way Oppo mar­keted it­self shows that the com­pany is lever­ag­ing a dif­fer­ent and high-end way to el­e­vate its brand recognition in Europe than it does in China,” Liu said.

Mar­ket dif­fer­ences

But an­a­lysts also warned that it could be quite chal­leng­ing for new­com­ers to quickly come up with lo­cal­ized mar­ket­ing strate­gies to please Euro­pean con­sumers.

“Sim­ply copy­ing Chi­nese ven­dors’ mar­ket­ing strat­egy in Europe may back­fire,” Liu said.

In Novem­ber, Xiaomi hosted sev­eral “1-pound-fresh-sales” on its UK launch day. The pro­mo­tion at­tracted mas­sive traf­fic to the com­pany’s of­fi­cial web­site, but just sec­onds af­ter the sales went live, buy­ers found that the sales page showed the hand­sets had sold out. This caused some back­lash among its fans and some buy­ers even ques­tioned the au­then­tic­ity of such sales.

“A fresh sale is sim­i­lar to Xiaomi’s hunger sale model which worked out well in China and In­dia, but Bri­tish and Euro­pean con­sumers won’t just buy into it. Their con­sumer habits are dif­fer­ent,” Liu said.

An­other mar­ket dif­fer­ence be­tween China and Europe is the way hand­sets are sold. Ac­cord­ing to an IDC re­port, about 50 per­cent of Euro­pean con­sumers buy elec­tronic de­vices through car­rier deals, and the per­cent­age of con­sumers pur­chas­ing at stores and through on­line plat­forms only ac­counts for 40 per­cent and 10 per­cent, re­spec­tively.

Bingo Liu, head of OnePlus’ Europe re­gion, told the Global Times that sales from brick-and-mor­tar stores rep­re­sent about 60-70 per­cent of smart­phone sales in Europe.

Un­like Xiaomi, Vivo and Oppo whose ties with Euro­pean car­ri­ers are weak due to a late start, early com­ers like OnePlus and Huawei have al­ready forged strong ties with lo­cal car­ri­ers and are reap­ing re­wards from the co­op­er­a­tion.

For ex­am­ple, OnePlus has inked strate­gic co­op­er­a­tion deals with Elisa, the largest tele­com car­rier in North Europe as well as ma­jor Nordic car­rier Telia. As a re­sult, the Chi­nese firm’s sales in Europe have posted a year-onyear growth rate of be­tween 60 per­cent to 70 per­cent, Liu noted.

Huawei’s line-ups are also avail­able in ma­jor Euro­pean out­lets and tele­com op­er­a­tors’ stores such as Voda­fone, a big boost to its Euro­pean sales.

Al­though there are for­eign com­peti­tors such as Sam­sung and Ap­ple which jointly claim about half of the Euro­pean mar­ket shares, Liu, the an­a­lyst, said he is con­fi­dent that the sales gap be­tween Chi­nese smart­phones and Sam­sung and Ap­ple will shrink in the fu­ture af­ter Chi­nese play­ers learn to adapt to lo­cal mar­kets.

“Chi­nese ven­dors – when­ever they en­tered the Euro­pean mar­ket – have an over­whelm­ing edge in cost per­for­mance, and they are also tech­no­log­i­cally in­no­va­tive,” Liu said.

Be­sides, “the year of 2019 is the kick-off year for 5G, and Chi­nese hand­set­mak­ers are al­ready lead­ing the com­pe­ti­tion,” he added.

File photo: VCG

A view of a Huawei ad­ver­tise­ment at a plaza in Rome, Italy.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.