The sudden explosion of Chinese brands and why you should care

When you think of buying a new smartphone, the first two names that come to mind are Samsung and Apple. The two tech giants are old business rivals known for driving technological innovation through their cutting-edge products and services, but with new Chinese brands entering the technology space, competition has risen like never before and new challenges, opportunities and concerns have emerged. Here's the truth behind the sudden explosion of Chinese brands and why you should care.

BBK Empire

“OnePlus – Oppo – Vivo – Realme” Of course I have heard of at least one brand among these famous brands, all of these brands are subsidiaries operating under the umbrella of the Dongguan-based Chinese company BBK founded by Duan Yongping.

BBK is a multinational conglomerate and is the world's largest smartphone maker in the first quarter of 2021 Outperforming even the most famous tech giants.

BBK may not be a world-renowned name, but its brands are dominating so much of the tech world so fast that their subsidiaries are now completely independent companies.

For example, realme is a former sub-brand of OPPO, and iQOO is a sub-brand of Vivo, and is on the same path to becoming an independent one. In theory, it may seem to everyone that these companies are separate and far from each other, but they communicate and cooperate with each other strongly and share ideas, experiences and strategies.

The genius of Chinese companies

When you look at the big picture, you realize the genius behind Chinese phone makers. You see, the more sub-brands in the market connect and share resources and expertise with each other, the easier it is to avoid losses. This is because the result achieved by one brand can be absorbed by the other brands, and the fact that one of those brands has a major problem makes them isolated from the rest of the other brands and they will not be affected by what happens to them, which leads to the dispersal of the effect.

This is perhaps one of the biggest reasons for the massive success of the BBK conglomerate. To understand how the giant is changing the tech industry, it is more appropriate to see its sub-brands as a single company rather than treating them as separate entities. To do that, let's take a closer look at the global smartphone market share stats for the first quarter of 2021.

The collective market share of the three subsidiaries of the BBK conglomerate (OPPO, Vivo and Realme) is 25%, which puts them ahead of giants such as Samsung at 22%, Apple at 17%, and its close competitor Xiaomi (a Chinese brand) at 14%. Also, let's not We forget that we did not add the market share of OnePlus to the equation, and the BBK conglomerate is still the largest smartphone maker in the world.

If you notice, Xiaomi and BBK follow the exact same strategy when it comes to penetrating the market: divide and conquer. The same is evident with Xiaomi's brands like Mi, Poco and Redmi and its partially owned brand Black Shark, all geared towards serving a specific audience and a specific purpose.

In the case of the BBK brands, Oppo and Vivo are positioned as innovative brands, that is, those that invest in research and development and innovate new technologies. OnePlus is designed to offer a premium smartphone experience at competitive prices. Realme is positioned as a low-end brand for budget and price-conscious buyers.

How do Chinese companies compete with Apple and Samsung?

If you have reached this point, you must have noticed how almost all Chinese brands seem to have a very specific goal in mind, selling large amounts of value-for-money products to price-conscious buyers to establish influence. There are three primary goals that Chinese companies pursue and the goals are, the public Strategy - message.

the target audience

We know that today's buyer is educated. They have the tools and knowledge to make the most of their money. This trend appears more prominent in the highly competitive Asian market with its highly elastic demand.

Hyperelastic demand simply means that a minimal change in the price of a product has an enormous effect on the number of units required for that product. Chinese brands are taking advantage of this phenomenon by lowering their prices to stifle local competition once they enter a new market.

The strategy

Since Asia has such a huge population, primarily from China and India, brands have the advantage of playing with numbers. They can afford to sell their devices at a lower profit margin if it means the devices will be sold in bulk.

For brands on a budget like Redmi and Realme, profiting from devices is not the point. They profit instead from their in-built ads and pre-installed bloatware apps on the devices.

So the logical way to achieve this goal is to put their phones in the hands of as many users as possible, using lots of celebrity endorsements and sponsorships. In addition, they chose the second engine feature to avoid the risk of investing in research and development in innovations that would fail.

Message

One of the biggest advantages of having multiple sub-brands is that each one can be used to create, market and exploit a unique brand image. Let's take OnePlus for example. When it first started, it positioned itself as a passionate brand with catchy slogans like “Never Settle” and “Flagship Killer,” it listened to feedback and made changes to its products accordingly and all this while offering a premium smartphone experience at great prices.

Now, seven years later, the flagship phone killer is making this top class phone himself. The point here is that Chinese brands tend to be more community-centric and customer-centric which is a great strategy for the fast-paced Asian market.

Do you buy from a Chinese brand?

Chinese brands may not be everyone's first choice, but in many markets, they're defining their territory fairly quickly. So much so that they are moving away from global brands and completely eliminating local competition.

But these value-for-money smartphones come at a cost. If you own a budget Chinese smartphone, it is difficult to get rid of the built-in software ads and bloatware some of which you cannot disable, which consume memory and lead to an uncomfortable experience.

Moreover, there is a growing concern in the tech industry about Chinese brands spying on their users, and this is what caused America to wage a fierce war on Chinese technology companies such as Huawei, ByteDance and others. However, famous Chinese brands have become offering us great value in their phones. Smart phones at varying prices to suit any budget, so if you want to buy a new phone, it is worth thinking about one of the phones belonging to the famous Chinese brands that have proven their ability to compete against Apple and Samsung.

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