OPPO, Vivo snap at Apple's heels in China mobile market

Mon Feb 1, 2016 4:32pm EST
 
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By Miyoung Kim and Yimou Lee

SINGAPORE/HONG KONG (Reuters) - Beyond China few may have heard of OPPO or Vivo, but these local handset vendors are rising up the rankings in the world's largest smartphone market, using local marketing savvy and strong retail networks in lower-tier cities.

Industry experts say these cities - there are more than 600 of them and some are bigger than many European capitals - are the next smartphone battlefield as China's major cities are saturated.

International brands such as Apple (AAPL.O: Quote) and Samsung Electronics (005930.KS: Quote) have mostly not yet reached this part of the market - which accounts for more than 56 percent of China's overall consumption, according to Beijing All China Marketing Research.

In an economy growing at its slowest pace in a quarter of a century, buyers in these smaller cities - with populations of up to 3 million - tend towards cheaper phones, which is good news for Guangzhou-based OPPO and Vivo, as well as Meizu Technology Co, an affiliate of Alibaba Group Holding Ltd (BABA.N: Quote).

"OPPO and Vivo have already overtaken Samsung and ZTE Corp 000063.SZ in China, and are working to chase down the big three of Huawei [HWT.UL], Xiaomi [XTC.UL] and Apple in 2016," said Strategy Analytics analyst Neil Mawston.

SELFIES, GIMMICKS

To be sure, these lower-priced newcomers lack the firepower of the premium brands, and operate on razor-thin margins or at losses. They need mass volume sales to keep going, the industry experts said.   Continued...

 
A commuter using his mobile phone passes an advertisement of Chinese smartphone maker Oppo at a train station in Singapore in this May 8, 2014 file photo. REUTERS/Edgar Su