Last week, a relatively unknown brand outside of China sold 100,000 units of its latest smartphone in 90 seconds and added pre-orders for another 7.5 million units. The company, Xiaomi, started in 2010 is already being called the Apple of China, though the co-founders would like themselves to be compared with Amazon. Xiaomi has caught the fancy of Chinese users and the company now sells more smartphones in China than Apple’s iPhone and recently overthrew Samsung to claim the most popular smartphone in China crown. The interesting part about Xiaomi is it exclusively sells its phones online in batches of 1,00,000 units and promises high quality products that match those from the likes of Samsung and other tier one brands, but at almost half the price.
Made in China
China has developed itself as the manufacturing hub of the world. Pick up any electronic device and nine out of ten times it would be made in China. That’s true even for Apple, which is known for its quality and products that are famously “Designed in California, Assembled in China”. Yet, when it comes to Chinese brands we have a tendency to frown upon them as inferior in quality and cheap. Now a handful of smartphone brands are trying to change that legacy.
Xiaomi might have been the one that has received most of the press, partly thanks to its CEO who unveiled its first smartphone while donning trademark Steve Jobs’ attire consisting a black turtleneck, a pair of Levi’s denims and New Balance sneakers, but that can only take a company so far. The quality of its products, its unique marketing and sales strategy has ensured its success and also led to an investment by Qualcomm’s ventures arm. But Xiaomi is not the only one.
Meizu is another player that is trying to make it big both in China and outside. The company started in 2003 by making MP3 players but then pivoted to making smartphones in 2008 as demand for MP3 players declined and smartphones started picking up. Meizu’s Android smartphone launches in mainland China are known to create queues longer than what one would witness at an iPhone launch.
While one can’t really call the design of Meizu smartphones original – there’s a reason why they were called the makers of Android iPhones – the company certainly does its bit to ensure its phones have much more to offer than just its iPhone-inspired looks. “We were among the first smartphone brands to launch a phone running on one of Qualcomm’s Snapdragon processor, even before Samsung. We have our own R&D both for hardware and software,” Meizu’s spokeswoman, Sierra Ma, explains.
Meizu has nearly 500 own-brand stores in China and has recently launched its brand in Russia with its own stores there as well. “When we enter a new market, we go all in with our own stores and support centres. We don’t believe in hit-and-run operations. Within three months of launch, Russian carrier Megafon was carrying our phones,” Ma says.
Then there is Gionee, an ODM-turned-brand that initially used to make smartphones for Indian smartphone brands but has now decided to launch products under its own brand in India and other countries. The company has its own manufacturing facility and has in-house design teams apart from software developers and hardware engineers. Everything is done in-house and the company is now gunning at Samsung and other tier one brands with its upcoming smartphones. “We only partner with the best names in the industry. For chipsets we have MediaTek and Qualcomm, Au Optronics and Samsung for display and Sony or Samsung for the camera module,” Gionee’s president, William Lu tells me.
Differentiators
Though all these players have different strategies to sell and market their products, there are a few things that are common to all of them. While the top global brands would hide the origins of key components like the display and camera modules, most of these top-of-the-line Chinese players actually flaunt the names on their product Web sites. “We are completely transparent about every single component in our phone so users know that they are buying a quality product,” explained Xiaomi co-founder Bin Lin while speaking at a media event earlier this year.
Unlike typical Chinese players that have powered India’s smartphone boom by supplying cheap, often-suspect-quality Android smartphones to local homegrown players, these Chinese brands are looking at the higher-end smartphone space. The idea is to provide high-quality products at half the cost not by cutting corners at the component level but by controlling marketing and distribution costs. “I don’t want my products to be compared with Indian brands like Micromax and others. We are far superior and want to be compared with Samsung,” Arvind Vohra, Gionee’s India partner, tells me.
While smartphones from these players will be priced much lower than competing products from tier one brands, local players that rely on OEMs in China for their product portfolio will still continue to have the price advantage.
“We get a lot of requests from potential partners in India and it could be a big market. But we are worried about the local players that have pushed the OEM trend and have kept prices low. We are a high-end smartphone player,” says Meizu’s Sierra Ma. It will still take a while for high-end Chinese smartphone brands to make their mark in India but one thing is certain, tier one Android smartphone brands have a new reason to worry for their flagship smartphones and it ain’t Apple.