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[August 16, 2013]
Never heard of ZTE, Yulong or Xiaomi? You will do soon: China's smartphone makers are creating a name for themselves overseas
(Guardian (UK) Via Acquire Media NewsEdge) For smartphone users in China, an Apple is less tempting than Small Rice. That is the translation of Xiaomi, a mobile phone brand that is unheard of in the west but now outsells the US technology powerhouse in the Chinese market.
Owners of an Apple iPhone 5 or Samsung Galaxy in Europe and America will soon find other brands such as Yulong and ZTE competing for their attention. Buoyed by success on the domestic stage, Chinese smartphone makers are ready to take on the technology establishment.
More than a third of all smartphones are sold in China, and Xiaomi is one of five companies whose success in their domestic market has propelled them on to the international stage.
China now accounts for one-fifth of the branded smartphones shipped globally, according to research firm Canalys, and the breakneck growth of its largest handset makers has begun to shake up the industry.
Gartner says four of the 10 largest global makers are now Chinese. Their names - Lenovo, Yulong, Huawei and ZTE - are not well known outside China, and they are still considerably smaller than Samsung and Apple. Nonetheless, these four companies already outsell Nokia and BlackBerry.
Chinese manufacturers, it seems, are no longer content with their traditional role of making phones for other firms. Instead, they are gearing up to take on the market leaders under their own name.
Lenovo, which has already overtaken Hewlett-Packard as the largest seller of personal computers globally, announced this week that combined sales of its phones and tablets now outstrip sales of its traditional computers.
Often mentioned as a potential buyer for its distressed Canadian rival BlackBerry, Lenovo's smartphone sales have grown 144% year on year. While the company's laptops can be found in most branches of John Lewis and Dixons, 95% of its smartphones are still in China, where it is number two behind South Korea's Samsung. However, as the PC market fades, Lenovo has made no secret of its desire to expand overseas.
Its chief executive, Yang Yuanqing, espouses what he calls a "two fist" strategy - defending the home turf with one hand and attacking abroad with the other.
Adept at facing two ways, Lenovo still relies on donkeys to deliver its products to some rural parts of China, but for a Beijing phone marketing event this month it secured an appearance on stage by the American basketball star Kobe Bryant.
Lenovo's first forays into overseas smartphone sales have been in emerging markets, including Russia, India and Indonesia, and the company says it has secured a 5% share in markets that it has entered recently.
"We have very aggressive plans to explore overseas markets," Lenovo's mobile boss Liu Jun told China Daily this week. "We hope the overseas market will contribute more than half of Lenovo's total smartphone revenue in the long run." Huawei, which ranks as the sixth largest smartphone seller worldwide, according to Canalys, has made no secret of its international expansion plans. It has located one team of handset designers in London and staged the global launch of its Ascend P6 in the capital, taking over the Roundhouse in Camden. Better known as a maker of telecoms equipment, phones comprise a small but growing part of its $35bn (pounds 22bn) a year in revenues.
Yulong Computer Telecommunication Scientific Co, to give the company its full name, is the Chinese equivalent of BlackBerry.
Founded in 1993 by chairman Guo Deying, its Coolpad smartphones have enhanced privacy settings that make them popular with government officials and businessmen. Sales of the devices have propelled it to the number four slot worldwide, but steps outside China have been tentative. Its first deal with a US network was secured last summer, with a budget 4G smartphone running on Google's Android software. Its sales topped out at 900,000.
In his regulation black T-shirt and jeans, Xiaomi's founder Lei Jun is the face of a new generation of Chinese technology entrepreneurs. His casual attire and crowd-pleasing performances at product launches have earned him the nickname, the Chinese Steve Jobs. But rather than focusing on foreign markets, Lei wants to turn Xiaomi into a software company. Its internet platform, which includes games, an online marketplace and a social messaging app, bring in just over $3m a month and Lei thinks that number could be much higher. "Xiaomi selling mobile phones is like Amazon selling Kindles," he told Reuters.
For Xiaomi, the smartphone is a device on which to sell more profitable wares. For other Chinese manufacturers, it is the key to a global empire.
Captions: Getting the message Girls use a mobile phone in Guizhou province, China, where brands which are little known in the west are making a huge impact and now looking further afield to take on Samsung, Apple, Nokia and BlackBerry Photograph: Sheng Li/Reuters (c) 2013 Guardian Newspapers Limited.
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