China's Smartphone Brands Aim for a Global Presence

As the Chinese smartphone market is slowing down， the home-made mobile phone manufacturers are increasing investment abroad and trying to improve quality to get rid of the \"cheapie\" label.

Recent news revealed that Xiaomi has realized smartphone production and delivery in India also from Foxconn factories located in Andhra Pradesh. Apart from Xiaomi， \"xiaohualian\" (namely Xiaomi， Huawei and Lenovo) will produce their own cell phones in India or other countries in the world.

Besides， according to French media， more and more Chinese smartphone brands are planning to nudge into the European market. At present， China boasts over 100 smartphone brands， among which around 15 or 16 brands have intentions to launch into the overseas market. Although some of OPPO， Meizu， Zopo and Xiaomi brands only have afew years' experience in the smartphonedomain， they are quite ambitious. Allof these brands hope to grow into theworld's third largest cell phone brandnext to Apple and Samsung.

France: Unique marketing approach

The survey conducted by the US market research institute Strategy Analytics shows that China's smartphone sales volume continues to top the global list， Russian satellite network reported recently.

According to Strategy Analytics， China will achieve a sales volume of 505 million smartphones in 2017， much higher than the 458 million in 2015. And the US smartphone sales volume is expected to grow to 169 million in 2017 from the 164 million in 2015.

In general， the global sales volume of smartphones will hit an all-time high of l.7 billion in 2017 from this year's 1.5 billion. China， the US and India are the top three source for smartphone demands. In 2017， India is expected to replace the US as the second largest smartphone sales market only next to China. Statistics shows that India will reap a sales volume of 118 million smartphones in 2015， which is to hit 174 millionin 2017.

The French website Figaro reported on August 18 that China's smartphone brand \"One Plus\" was quite sensational this summer by virtue of its ingenious marketing approach. With no comparative advertising budget with Apple or Samsung， One Plus successfully communicated its brand by social media marketing and cooperation with Paris fashion boutique Colette. One Plus generously discloses its key to success - high product quality and confidently regards itself as an alternative to Samsung and Apple products.

Some other Chinese cell phone brands adopt a secret approach to grab the French market share. One industry insider reveals that \"Huawei and ZTE are closely cooperating with some French telecom operators by providing some network equipment. Hence， the two brands may promote their cell phones to these operators\". Other cell phone brands cannot enjoy such superiority.

The once nameless WIKO cell phone brand has successfully nudged into the French market with a second largest sales volume， namely 17% market share last year only next to Samsung. At present， WIKO's management level no longer hides that the brand comes from China.

It is reported that price is the superiority for the Chinese cell phone brands， which have basically occupied the market below EUR 200. The cell phone market below EUR 200 was the only growing niche in the French cell phone market last year.

India: Home of factories

Recently， Huawei obtained approval license from the Indian government for manufacturing handheld devices in India， which has attracted great public attention.

The world's largest electronics manufacturer Foxconn said in July that in order to expand scale in India， it plans to build at most 12 new factories in India before 2020， which will hire a maximum of l million local workers and which is said to cost an investment of USD 20 billion. In addition， Foxconn's senior executive confirmed that Foxconn will set up production lines in India.

Foxconn is the largest private employer on the Chinese mainland and at the same time serves as the largest global OEM for Apple's iPhone and iPad. With over 10 large scale factories on the Chinese mainland， Foxconn has 1.2 million employees in China， accounting for the majority in its global market. Foxconn has contributed a lot for China to become the world's factory.

Foxconn not only serve as OEM for Apple， but also for Xiaomi. On the global smartphone shipment list of 2014， Apple ranked the second and Xiaomi the fifth. Besides， Foxconn also serves as OEM to such PC manufacturers as Lenovo， Dell and HP. Foxconn s expansion in India is interpreted from two perspectives: first， Foxconn is deploying resources globally rather than only focusing on China; second， the globalization ofIT manufacturing resources incl. smartphone and PC is obscuring the \"Made in China\" label.

Apart from Foxconn， Huawei， a smartphone manufacturer with the fourth largest global smartphone shipment has also set up factories in India.

For global allocation of manufacturing resources， why has India become the first stop? According to Foxconn， the most important reason is that the Indian market promises great imagination. With a big population ofl.2 billion， India is probably to surpass China in future at the current population growth rate. Statistics shows that in 2014 India's mobile phone shipment achieved 275 million in 2014， accounting for 14% in the global market and claiming as the world's second largest mobile phone market. But the smartphone shipment was only 81 million， for which the penetration ratio was only 30%. The domestic smartphone market is becoming saturated， whereas India has tremendous imagination. According to market proximity principle， brand manufacturers would like to set up plants in India.

So far， Huawei， Xiaomi， Lenovo， ZTE， Vivo， OPPO， Gionee and One Plus have begun to sell cell phones in India. Xiaomi， Huawei， Lenovo Motorola and ASUS have launched Android cell phones at a price of USD 150 in India， which top the sales list on e-commerce website.

Allen Wang， Consumption Division President of Huawei India， said that India is an important overseas market for Huawei and we hope to grow into the top three cell phone brands in India during the following three years.

The US: Focus on high quality

As of 2011， China replaced the US as the world's largest smartphone market. By virtue of surging user base and over pricing of foreign brands， the homegrown brands rose quickly and occupied the domestic low and medium-end market. Four years later， however， the domestic market is slowing down， which pushes the local brands to nudge into the overseas markets or even the markets dominated by foreign brands.

In July， ZTE launched the ever most expensive flagship product Axon in the US at a price of over $300， which once again shows the manufacturer's ambition to turn to medium and high-end products. Chen Lixin， CEO of ZTE North America said at the new product launch press that the company aims to double its sales volume in the US during the three years to come by increasing value-added services rather than nameless low-end cell phones.

According to some experts， ZTE's strategy is similar to the Japanese and Korean electrical appliances which have successfully nudged into the US market - first entering the market with small margin yet quick turnover and then reap fat profits by establishing brand image with more product premium via innovative technologies. Particularly in 2008 after Google launched Android system， the cheap customized cell phone system lowered the standard for the newborn brands which aim for a niche market. Bigger RD input and stronger patent awareness ofthe Chinese companies have laid a solid foundation for the Chinese companies to turn into an innovative enterprise from an OEM factory. ZTE said that unlike the previous strategy of hundreds of production lines， the company has adopted a new strategy to reduce production lines yet establish competitive products， especially localized high-end products.

According to an US industry insider， who was invited to ZTE's new product launch press， the style of the opening music and the interaction with NBA players to play basketball in the exhibition section show that this Chinese company wants to integrate into the US culture， especially to the medium and high-end market. \"The style is very fashionable， not like the traditional rigid and awkward image of the Chinese companies. And the senior executives are very confident with fluent English communication ability.\"

Chen Lixin said that after it sold the first cell phone in the US market in 2007， ZTE then spent eight years to sharpen its competitiveness. Now with a local consumer base of nearly 20 million， local partners' investment of over $18.55 billion and particularly more than 60，000 patents at the end of 2014， ZTE is more confident to step into the medium and high-end production lines.

Unlike the traditional cell phone manufacturers such as Huawei and ZTE competing in the US market by product upgrading， the young Chinese startups take advantage of the initial brand awareness and global strategy， and finally flexibly find a direct selling approach in the US market dominated by aggressive operators. These startups even have their loyal fans and One Plus with the slogan \"no compromise\" is a representative among these startups.

At present， Huawei， ZTE， One Plus and Coolpad are still marginalized in the US market and the total market share of these brands is less than 10%. And it needs time to see whether the boutique strategy can earn market share. Analysts said that the homegrown cell phone brands' boutique strategy to use the high-configuration hardware which is seldom used by Apple or Samsung can temporarily satisfy a few consumers， but it is still a big gap with Apple， whose gross profit exceeds 40%. Mass production matters for whether the homegrown brands are able to build themselves into international brands like Apple and Samsung. Moreover， before mass production， the homegrown brands may face operators' channel excessive inventory and patent war staged by other mature brands.