Bye Bye Apple: Chinese Smartphones are leading the Southeast Asia Market

12/04/2019

Chinese smartphones are driving the expansion of the Made in China leading the Southeast Asian market. Huawei, Xiaomi, Oppo, and Vivo are the companies that have dethroned Apple and Samsung in SEA, the longstanding smartphone market leaders

 

For what concerns technology, Chinese hi-tech is second to none. After some years of Apple and Samsung’s supremacy, people are starting to prefer mobile brands coming from the PRC, especially in Southeast Asia (SEA).

Indeed, Chinese smartphones’ global awareness is growing steady. After the boom in the domestic market, increasing investments in research and development have enabled the Dragon’s mobile companies to reach 50% of the international market already in 2017.

 

Huawei, Xiaomi, Oppo, and Vivo have defeated the internal competition and now represent 70% of all Chinese smartphone shipments while one out of three smartphones in Europe is Chinese.

 

These four brands of the great Asian country guide the expansion of the Made in China worldwide. In 2017, 30 million smartphones of these four brands were able to enter the emerging Southeast Asian market out of a total of 100 million of smartphone shipments, gaining 29.6% market share based on data released by IDC.

 

Chinese smartphones are leading Southeast Asia - oppo - cifnews

© Unsplash. OPPO R17 launch at Vietnam. Four out of the five major SEA markets are dominated by Samsung, but OPPO got hold of the Philippines.

 

Of the four, Vivo smartphones recorded the highest year-on-year change in terms of market share and shipment volumes. The Chinese company doubled the shipment volume from 3.3 million in 2016 to 7.2 million in 2017 while the market share experienced an extraordinary increase of 225%, from 3.2% in 2016 to 7.2% in 2017.

Founded in 2009 in Dongguan, Guangdong, already in 2015, Vivo Communication Technology managed to rank among the top 10 smartphones manufactures, achieving a market share of 2.7%.

Compared to the other three Chinese smartphone makers, Vivo based its success on the SEA market since its international expansion in 2014. In that year, the company entered the Thai marketplace and then launched its products in India, Indonesia, Malaysia, Myanmar, Philippines, Thailand, and Vietnam.

Oppo Electronics Corporation, instead, although its slightly longer history, owes its success to the domestic market. Launched both in China and in the international market in 2004, this other Dongguan-based company became the biggest smartphone maker in the Middle Kingdom in 2016 ranking 8th worldwide.

Since establishing Thailand as its first international market in 2009, Oppo has maintained rapid growth in the region by offering targeted products. Less than ten years later, Oppo managed to leapfrog the Korean brand Samsung by growing 70% year-on-year in 2018.

 

Although it still ranks second in the Southeast Asian region, Oppo has become the top vendor in Thailand shipping nearly 1.1 million smartphones and taking a 22.2% market share.

 

Xiaomi Corporation is an internationally known Beijing-based mobile company. The popular brand released its first smartphone in 2011 but quickly became China’s largest smartphone company in 2014.

In 2018, Xiaomi was the world’s fourth-largest smartphone manufacturer ruling the domestic market and also the Indian one. As it was the world’s third-biggest market, the Chinese brand turned to India in 2015 where it established its presence strongly and rapidly thanks to the affordability and usability of its products. Then, the company targeted the whole region where it managed to claim the second spot in Indonesia.

Thanks especially to its presence in the SEA market, today, Xiaomi is a top-five player in 30 countries.

 

Chinese smartphones are leading Southeast Asia - canalys - cifnews

© Canalys 2018. Smartphone Analysis, November 2018.

 

However, the most renowned consumer electronics manufacturer abroad and the most discussed one is the Shenzhen-giant Huawei, which also made its way in SEA.

The multinational’s history started in 1987 but its foreign expansion only started in 1999 when the company opened a research and development center in Bangalore, India, to develop a wide range of telecom software. After 2000, Huawei increased its speed of expansion into overseas markets, having achieved foreign sales of more than $100 million by 2000. By 2002, Huawei’s foreign market sales had reached over $552 million.

Despite facing a growing international backlash, Huawei is benefiting from the SEA’s trend toward the digital. Recently, in fact, many countries took the decision not to sell Huawei products on US invitation to ban the company from the market for security reasons.

 

The brand’s awareness in the Southeast Asian region is still strong. Here, Huawei’s promotion of an affordable model for telecom development represents a desirous and lucrative opportunity. Actually, the smartphone manufacturer hopes to convert as many people as possible in SEA into 4G customers in order to spread the 5G in a nearer future.

 

The company representatives deny that the push into Southeast Asia is related to the recent pushback against Huawei products from the US and Europe, saying that, as a neighboring region, it had been an area of strategic importance from the beginning.

Globe Telecoms in the Philippines has, in fact, partnered with Huawei since 2011 to help modernize its telecoms infrastructure networks. Recently, Globe planned to bring customers online for the first time by using the company’s equipment to provide 5G connections in homes in areas of Manila where there is no internet.

However, the Sino-US trade war had a slight effect in the Southeast Asia region as the smartphone shipments to the area recently fell by 3% year on year, a surprising drop for the most important market in Asia, outside of India and China. Three of the region’s five largest markets suffered falls in 2018, as a consequence of the commercial war between Washington and Beijing.

SEA countries had a different experience, though. For example, although, last year, Vietnam and Thailand plunged 17% and 20% respectively while the Philippines dropped by 3.1%, Malaysia grew 5.3% while Indonesia had the biggest increase at 13.2%.

 

Chinese smartphones are leading Southeast Asia - bangkok - thailand - cifnews

© Unsplash. Bangkok, Thailand. Southeast Asia as one of the fastest growing regions in the world may continue to be the battleground for Chinese tech titans as they continue to make their mark on the world stage.

 

In the early half of the decade, the global smartphone scene was mostly a competition between Apple and Samsung. However, over the years, Chinese smartphones have entered the game offering high-quality products at affordable prices.

Brands like Oppo and Vivo offer premium phones at budget prices, which revealed to be a successful strategy, especially in rural China. However, the Chinese smartphone market saturated soon. According to research by Kantar Worldpanel, the top-five Chinese smartphones’ brands now hold the Dragon’s share of 91% of the market.

Therefore, the market saturation forced these players to apply a similar strategy beyond the country’s borders to the closest neighbor: Southeast Asia, which represents the world’s third most populous region and the sixth-largest economy.

 

SEA actually looks like a younger modern PRC. The technological environment is still immature but it represents a blank canvas the Chinese companies could target easily as more than 25 million people out of 640 million are ethnically Chinese, therefore more receptive to the Dragon’s influence.

 

In addition to a large portion of the population already familiar with the services the Chinese companies offer, the Southeastern region is also home to an emerging tech-savvy middle-class, just like China.

The neighbor is not too much underdeveloped but it is not overdeveloped, either. It shares with China the same digital evolution and here, right in the local digital economy, the Dragon’s investment is building a sort of “Digital Silk Road” driven by its national tech champions.

Therefore, in the SEA market, the Middle Kingdom found its natural partner and in the meantime, Chinese smartphones found here their natural customers.

As long as PRC smartphone manufacturers reached proper know-how and awareness, their success in the southern neighbor was about to boom. Samsung is supported by a long history in mobile devices, but the Dragon share with the region a common history of digital development, to which the Chinese companies know how to talk.

In the Eastern side of the globe, Apple era has gone. It is time for Huawei, Xiaomi, Oppo, and Vivo to take actions, starting from leading the neighboring markets to reach worldwide recognition.

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