Telecoms & IT

Smartphone Showdown

Rise of Chinese smartphone firms

hinese smartphone vendors are claiming a considerable share of the global market, threatening long-established brands. But is affordability enough to win new customers in Europe?

It is a deeply democratic characteristic of free markets that no business, company, or brand, is guaranteed an indefinite stay at the top. The free market is a harsh mistress with no qualms about showing the exit door to once-great companies. Nowhere is this more observable than in the case of smartphone manufacturers.

The names of the top handset manufacturers in the 1990s would not ring any bells in a modern teenager’s ears. Even companies such as Nokia, Motorola, Sony Ericsson, and Alcatel, which ruled the market back in the early 2000s, are now either out of business or nowhere near the top in terms of their market share.

As such, it would be unwise to assume that today’s great smartphone manufacturers would receive a different treatment by the market. The arrival of the Android boom, platform sharing in hardware architecture, and the shift toward minimalist designs have put an end to the exclusiveness of smartphone manufacturing, and a number of Chinese original equipment manufacturers (OEM) have risen to the occasion.

Chinese handsets, once dismissed as cheap and low-end, are beginning to turn a few heads. According to the IDC, a market intelligence firm, three of the top five smartphone makers in 2Q2018 were Chinese.

With a market share of 15.9%, Huawei claimed the second slot after Samsung, which is still the world’s leading smartphone vendor, owning 21% of the global market. Apple (12.1%) took the third slot, and it is followed by two other Chinese consumer electronic firms, Xiaomi (9.5%) and OPPO (8.6%). The remaining 32.9% of the global market for smartphones is supplied by a mix of other vendors including Chinese brands such as Lenovo, ZTE, OnePlus, and Vivo.

It would be unfair to assume that Chinese vendors are only up there because of their economy class lineups and their dominance in emerging markets, as Huawei—and to some extent, Xiaomi—seem to have a high level of sophistication in their products and brand image, while offering high-end smartphones in mature markets such as the GCC region and Western Europe.

As of October 2018, Huawei had a market share of 15.5% in Western Europe, with its flagship device, Huawei P20 Pro, offering features on par with Apple’s and Samsung’s flagship handsets. Indeed, many consumer electronic reviewers would admit that Huawei is currently offering the best technology that money can buy for half the price demanded by Apple and Samsung.

After Huawei, which was the first Chinese smartphone manufacturer to go international, Xiaomi is creating another success story. From near-absolute anonymity in 2013, the company has worked its way up to the fourth slot in the global market for smartphones. What is more, having conquered the markets of China and India, Xiaomi has set its sights on Europe.

After holding its first global launch event in Madrid on 24 July, 2018, Xiaomi officially announced its entrance to France’s market in May 2018 during separate launch event. The Chinese handset manufacturer has secured a market share of approximately 4% in the continent as of November 2018, which is quite a feat in a saturated market.

Although Chinese devices are practically unbeatable in the mid-range market, where the pragmatist customer wants to get the maximum features at a minimal price, the dynamics of European markets are rather different. Xiaomi cannot solely rely on playing the affordability card if it wants to be taken seriously in Europe’s market, where concepts such as brand prestige, brand image, and brand loyalty actually matter.

For better or worse, modern marketing has succeeded in establishing the belief that commodities such as smartphones have metaphysical qualities in addition to the earthly functions they perform. In a world where phones have turned into totems of belonging to certain social classes and clubs, with some going as far as achieving a cult status, Huawei and Xiaomi need to pay more attention their brand personalities.

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