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Rival Chinese Phone Makers Seek to Fill Gap left by Troubled Huawei

Aron Chen

posted on October 28, 2020 5:46 pm

Chinese smartphone makers like Xiaomi and Oppo are actively seeking to grow their market share in the European market as their compatriot rival brand Huawei is busy tackling with the technology backlash fueled by US' tech export sanctions and others such as the Clean Network initiative.

Data complied by market research company Canalys indicated that Huawei's smartphone market share in Europe contracted to 17 percent in the second quarter, a decline of 17% compared to last year, while Xiaomi was the fastest growing vender in the market that same quarter with a market share that tied with Huawei to become the third largest smartphone vendor in EU market. Samsung and Apple still lead the market with 30% and 21% market share respectively.

Xiaomi and Oppo have grown significantly in Europe in the second quarter. According to Counterpoint, another market researcher, who said that both brands saw their European sales grew 55 percent and 41 percent respectively, as Huawei's declined by 46% compared to last year.

For the first nine months of the year, revenue of Huawei's smartphone business group came in at 671.3 billion RMB, up 9.9% from 610.8 billion the same period last year. However, the revenue growth of 9.9% has slowed sharply compared to 24% in 2019. The Shenzhen-based telecommunication giant hasn't mentioned smartphone sales number for Q3. However, a Counterpoint report suggested that Huawei's global smartphone market share has dropped to 16 percent in August from 21 percent in April when it took Samsung’ leading position in market share.

Huawei, which just launched its latest flagship smartphone Mate 40 on October 22, barely managed to maintain near-double-digit growth in terms of 2020Q3 revenue, despite the supply chain difficulties brought by US export sanctions and the pandemic.

Some analysts indicated that Huawei is going to rely on the Mate 40 series to boost its revenue for the rest of this year..

Mate 40, which could be Huawei’s last smartphone to be equipped with the company's in-house Kirin SoC, began pre-ordering on October 23.

Oppo, a newer entrant which only account for 3% in Europe, is making a significant push to fill a gap left by Huawei, nearly every other Chinese smartphone company's biggest domestic rival.

Europe has become an attractive market for Chinese smartphone vendors as Huawei's presence, both in the smartphone and the telecommunication devices categories, is diminishing, leaving spaces to fill.

According to Maggie Xue, Oppo's Western Europe president, Europe is a key market in Oppo's global expansion into the high-end smartphone market, and the company's senior management have set ambitious goals there.

For Oppo, its short-term goal is to increase EU market share to at least 5% by next year. The Dongguan, Guangdong-based brand plans to further boost the presence there in the next three years, as revealed by Allen Wu, Oppo's vice president.

In the past few months, Oppo has inked partnerships 5G handset sales agreements with the major local carrier companies including Orange, Vodafone, Deutsche Telekom. 2020 is only the third year Oppo has officially began operating in the European market, but the company claims that it already has branches in almost all countries.

"Western Europe is the fastest-growing market (in terms of smartphone) at 300%," said Wu, "the long-term goal for us to become a market leader with at least 10% to 15% of total market share there. We aim to achieve the goal in the next two to three years."

Apart from Europe, Oppo has a plan to continue investing in major overseas markets, including India, where Chinese companies encountered regulatory hurdles earlier this year due to the local anti-China sentiment following a violent border clash between Indian and Chinese troops. Wu, whose company has assembling factory in India, said that the country's anti-China sentiment will not stop Oppo's effort to expand footprint, "our factory will keep operating there, and we will increase our investment in India in the future.” 

Besides Oppo, Xiaomi, which is already a major vendor in a few developing country markets across the world, also has ambitious goals in Europe.

In a recent interview with state-owned news agency China News Service, Xiaomi's founder and CEO Lei Jun said his company aims to surpass rivals, including Huawei, to become the No.1 smartphone vendor in Europe in the next few years.

To better target each individual countries, Lei said that Xiaomi would use different localization strategy based on cultures.

Xiaomi has managed to increase its global smartphone market share significantly from 8% to 11% between April and August this year, according to Counterpoint. The increase is attributably mainly to he brand's outstanding performance in filling the spaces left by Huawei in Europe in Q2.

"We believe that Xiaomi, Oppo will be the major beneficiaries in filling up the big gap to be left by Huawei in these markets next year," Counterpoint noted in its report.