Why OPPO, the mystery handset maker, easily beat Xiaomi and Apple?Economist Analysis gives you the marketing mystery among them!

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Earlier, because the Chinese Republic of China legislator Chen Opper in the establishment of the question stage a joke, think that the manufacturer plagiarized his name copyright, instantly let A in Taiwan originally unknown intelligent mobile phone manufacturer OPPO (Opel) widely known (by the way, to copy is also copied Chen father, Chen Mother's copyright).A few years ago, oppo and Vivo were obscure smart handset makers, but Economist beat Apple and Xiaomi in their home market with a full grasp of trends, the latest issue of The Economist wrote in particular. So today let's follow The Economist's introduction and take a peek at the magic company that has taken the first place in the 2016 cities in mainland China [II]!The Economist's reference is as follows: As a South China city close to Hong Kong, Dongguan's more famous goods are a variety of cheap jewelry, rather than high-end equipment.However, in the midst of the dust, there is a low-flying factory with a sparkling halo that produces 50 million smart phones a year for Oppo-a company founded by step High Electronics [III], but is now operating independently. Inside the plant, in addition to the usual assembly lines and dense laborers, there are dozens of employees in quality engineering and product control testing who are responsible for conducting 130 different tests before the Oppo mobile phone is officially brought to market.Such stringent quality requirements are inevitably reminiscent of Apple's handset foundry, a world-class plant built by Foxconn in nearby Shenzhen with a similar team. But what is different is that the company specializes in producing relatively inexpensive handsets for the Chinese local market. Oppo and his sister company, Vivo, were founded in 2004 and 2009 by step High, and, like a large number of unnamed Chinese manufacturers, they are producing inexpensive mobile phones.The two companies have not even received Apple's attention at all, and Xiaomi is Apple's serious problem in the Chinese market: attracted by viral marketing, with experienced city dwellers snapping up sophisticated handsets produced by the company. But in June 2016, Oppo R9, which sells for about $400 trillion, sold more than twice times its own iphone, making it China's best-selling handset.Vivo, who targets young groups with a low-priced strategy, has also risen strongly. Both brands have done a great success.Two years ago, it was hard for them to be among China's top five smart handset makers, but now they are in the five in the world.In the third quarter of 2016, 1 of the 3 smart phones sold in China came from the two brands, while in 2012 their combined share was less than 3%. This should arouse Apple's vigilance.Tim Cook, the company's CEO, had expected China to become its biggest market in 2013.But iphone sales in the Chinese market have stagnated, with market share falling to 7.1% in the third quarter of 2016, well below the 11.4% per cent a year ago. Xiaomi has more reason to feel restless.About 6 years ago, the company heavily bet on the light asset model, selling mobile phones almost entirely through online channels.At a time when the overall market size of smart mobile phones is growing, this model does work well, especially in large cities with strong scientific and technological awareness among ordinary consumers.Xiaomi's valuation once reached $46 billion, but the company's fortunes in the Chinese market have plummeted. The main reason for this change is that market growth has shifted dramatically to the middle class in small cities.Consumers there are less aware of smart phones than big cities such as Beijing and Shanghai, and have concerns about online shopping.They want to be able to touch and contrast different phones with their own hands. Oppo and Vivo noticed the difference early on.Oppo quickly occupied the market because it had opened many physical retail stores in small and medium-sized cities by investing heavily.Today, the company's mobile phones are available in about 200,000 retail stores in mainland China, which also gives salespeople the opportunity to reach out to customers and persuade them to buy more expensive phones. Oppo's strategy was originally orchestrated by step High founder Duan Yongping, who started by selling simple electronics.With a keen sense of smell in financial markets and a strong admiration for stock God Buffett (who had a chance to have lunch with Buffett for more than $600,000 trillion in 2007), he has a reputation as a "Geffite" in China.Although Duan Yongping has retired, he is still influencing the culture of these companies. Because Xiaomi's internet strategy has been a great success, it is not easy to be tempted by such a strategy.Many companies are trying to imitate Xiaomi's model.Insiders revealed that since 2011-2013, Oppo has seriously considered how to expand online sales channels, but ultimately decided to give up.Li Bingzhong, head of Oppo's international mobile operations, said it stemmed largely from the company's long-standing adherence to the "duty." As a result, Oppo put more effort into motivating physical retailers.The company has shown a willingness to share more profits with retail channels.They use a complex system of subsidies to adjust the amount according to different patterns and seasons.A retailer in a small town in Sichuan said that despite his sale of many brands of smart phones, the generous subsidies offered by Oppo made it more willing to market the company's products. The practice also clearly comes at a cost: Oppo does not disclose the size or profitability of the company's subsidies, which are likely to be lower than those of other smart handset makers.China's smart mobile phone market, though huge, is struggling to make big profits.From the design of components and chipsets to OEM production, it is easy for companies to outsource all production processes, leading to a low threshold for the mobile phone industry – However, the physical retail network set up by Oppo and Vivo is far more difficult to replicate than online channels. Many enterprises are bound to trigger a fierce price war, especially in the cheap mobile phone market.Analysts believe the price of smart phones in China could fall to $50 trillion. The pressure of the local market is an important reason why Chinese enterprises are expanding into the international market.In the fourth quarter of 2016, Xiaomi and Vivo competed for the throne of the second-largest smart handset brand in the Indian market (Samsung came in first).Local telecoms equipment giant Huawei already has two-fifths of its sales coming from overseas, and its consumer business executive, Shao Yang, said it would rise to three-fifths per cent in 5 years. Oppo has moved into the Indian market and became the second-largest smartphone brand in Southeast Asia after Samsung.The company also built a new marketing center in Cairo with a view to expanding markets in Africa and the Middle East. Kevin Wang of Kevin Wang Markit, a market research firm, believes the smart phone industry will face a round of consolidation.He predicts that most of the more than 50 handset makers in mainland China will disappear within 5 years.If Oppo and Vivo can stay at their peak, they are no less surprised than their high-speed rise.

Extended Reading/Appendix:

  1. Product Reference: OPPO R11S Intelligent Mobile phone.
  2. Idc:top five Smartphone vendors in PRC, shipments, he, and year-over-year growth, 2016 preliminary Data (Units in millions).
  3. Guangdong Step High Electronics Industry Co., Ltd.: R & amp; d Company, headquartered in Dongguan, Guangdong Province, the company's size of 15 to 50 people, the company's website is "www.vivo.com.cn".
  4. Guangdong Europa Mobile Communications Co., Ltd. (OPPO): R & amp; d based Enterprises, the main focus on intelligent mobile phones (Mainland China is also known as smartphones) and accessories, headquartered in Shenzhen, Guangdong Province, the company's size of more than 2000 people, the company's Web site is "www.oppo.com".
  5. Original reference article: Moby Whale Forum.
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