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April 22, 2019
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Sub-brands are the new weapon in China’s smartphone war

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One of China’s top smartphone brands Vivo appears to have joined its fellows Oppo, Huawei and Xiaomi in setting up a new sub-brand as a softening market and heightened competition at home drive players to venture upon their original reach.

A new smartphone brand called iQoo made its debut on Weibo, China’s answer to Twitter, on Tuesday by greeting in English: “Hello, this is iQoo.” It also playfully encouraged people to guess how its name is pronounced, as the spelling doesn’t resonate with either Chinese or English speakers. Vivo immediately reposted iQoo’s message, calling iQoo a “new friend.”

Vivo has not further revealed its ties with iQoo, although the latter’s Weibo account is verified under Vivo’s corporate name. TechCrunch has contacted Vivo and will update the story when we have more information.

Screenshot of iQoo’s first Weibo post

Sub-brands have become a popular tactic for Chinese smartphone makers to lure new demographics without undermining and muddling their existing brand reputation. As the third-ranked player by shipments in 2018 according to research firm Counterpoint, Vivo is the only one in China’s top five smartphone companies without a subsidiary brand.

“Sub-brands can help fill the gap in parent companies,” Counterpoint’s research director James Yan told TechCrunch. “I think iQoo is a brand born for the gaming market, the online sales channel, or young consumers, similar to what Honor did to Huawei.”

Huawei cemented its top spot with solid growth in shipments last year by playing a two-pronged strategy. Its sub-brand Honor has its eyes on the mid-range and Huawei stays at the top end. Vivo’s sibling Oppo, which falls under the same electronics manufacturing outfit BBK, came up with an exclusively online brand Realme in 2018 to go after Xiaomi’s Redmi in India’s burgeoning smartphone market. Xiaomi pressed on by launching Poco for India’s high-tier market. To further solidify its multi-faceted approach, Redmi shed the Xiaomi branding in January to start operating as an independent brand focusing on cost efficiency.

These moves arrived as years of breakneck growth in China’s smartphone space comes to an end. Overall smartphone sales contracted 11 percent in 2018 according to Counterpoint, as users become more pragmatic and less likely to upgrade their handsets. Local players reacted swiftly by going global and introducing headline-grabbing features like Xiaomi’s folding screen and Honor’s pole-punch display, putting a squeeze on global players Apple and Samsung. In 2018, Huawei shored up a 25 percent market share to take the crown. Trailing behind was Oppo, Vivo, Xiaomi and Apple . Samsung plunged 67 percnet to take seventh place.

News Source = techcrunch.com

Report: Chinese smartphone shipments drop 21% to reach lowest level since 2013

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Analysts have long-warned of a growth crunch in China’s smartphone space, and it’s looking like that’s very much the case right now.

China’s smartphone growth has been the feel-good story for domestic OEMs who have clocked impressive figures as the billion-plus population has rushed online via mobile devices. However, the market reached saturation point in 2017 — when sales stopped growing for the first time — and the first quarter of this year is already showing savage results.

In a report released today, Canalys claimed that shipments across the industry fell by 21 percent year-on-year in Q1.

The total number of mobile devices shipped in China dropped below the 100 million market in a quarter for the first time since late 2013, the firm added.

“Eight of the top 10 smartphone vendors were hit by annual declines, with Gionee, Meizu and Samsung shrinking to less than half of their respective Q1 2017 numbers,” the report read.

Ouch.

Of the field, only Xiaomi the firm tipped for an IPO at a $100 billion valuation — was able to post positive momentum as its numbers grew by 37 percent to reach 12 million. That was enough to see it overtake Apple into fourth place, but Xiaomi numbers are still heavily reliant on its $150 Redmi range, which isn’t as lucrative as its higher-end products.

Huawei, Oppo and Vivo led the market. Somewhat incredibly, those three firms plus Xiaomi now account for a very dominant 73 percent of all shipments, which Canalys believes is bad for consumers and smartphone aficionados in China.

“The level of competition has forced every vendor to imitate the others’ product portfolios and go-to-market strategies,” analyst Mo Jia said in a statement. “While Huawei, Oppo, Vivo and Xiaomi must contend with a shrinking Chinese market, they can take comfort from the fact that it will continue to consolidate, and that their size will help them last longer than other smaller players.”

There might be a bright spark coming soon. Canalys anticipates growth in the second quarter as Oppo, Vivo and Huawei trot out new flagship devices. But China’s once-booming industry is now having to contend with the same issue as the U.S.: consumers don’t upgrade their phone as frequently as carriers would like.

News Source = techcrunch.com

iPhone 8 launch propels Apple to growth in China after 18 months of sales dips

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Apple is finally back to growth in China.

The company has broken a run of sales decreases that stretches back six quarters thanks to promising early signs for the newly released iPhone 8, according to a new report from Canalys. The analyst firm recorded 40 percent annual growth for Apple in Q3 2017 with 11 million shipments during the three-month period. It noted also that the iPhone 8 accounted for a higher proportion of iPhone sales than the iPhone 7 did last year.

Apple’s revenue from China is down by more than 50 percent from two years ago, according to its most recent Q2 earnings, so growth is much-needed. However, despite progress, the firm ranked only fifth in the Canalys report.

Huawei led the field with 22 million shipments, fractionally ahead of Oppo (21 million — the only annual decline) and Vivo (20 million). Xiaomi, which is rejuvenated in 2017, came in fourth.

Beyond the raw data there are a few notable takeaways worth digging out.

Firstly to Apple, which Canalys believes is not out of trouble in China.

The impact of the iPhone X, the much-anticipated device that goes on sale November 1, isn’t reflected in this report but already limited supply around the phone and its expensive price tag — which starts at $1,000 for the most basic model — may mean the phone doesn’t deliver stellar growth that the U.S. firm saw in China when it released the iPhone 6, its first larger sized device.

“Apple is unlikely to sustain this growth in Q4,” Canalys’ Mo Jia said in a statement.

“While the iPhone X launches this week, its pricing structure and supply are inhibiting. The iPhone X will enjoy a healthy grey market status, but its popularity is unlikely to help Apple in the short term,” Jia predicted.

Beyond Apple — which is so often the focus when studying smartphone sales in China, given its importance to the company — it is clear that a few brands now dominate the Chinese smartphone market.

The top five sellers in Q3 2017, according to Canalys’ numbers, accounted for a massive 75 percent of all devices shipped in China. The analyst firm is predicting that Xiaomi may break into the top three thanks to its usually-impressive performance on China’s major online shopping day — 11/11 — and offline retail, but, that side, it is hard to see any others making headway on the top players at this point.

That’s particularly important because data suggests that growth in the Chinese smartphone market is topped out.

The Canalys report estimated that the market dropped by five percent year-on-year to 119 million shipments. That’s a second successive quarterly drop.

China remains the single largest market for smartphone firms on the planet, but the declines explain why many firms have expanded their focus to cover fast-growing markets like India, which overtook the U.S. on shipments numbers in Q3, and Southeast Asia.

These regions do not yet rival China but, when competition is tough and the market is shrinking, they represent more accessible opportunities for revenue.

News Source = techcrunch.com

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