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Chinese brands ready to make debut on the global stage

Publication Date : 16-01-2014

 

They hide in the shadows, despised by many and often described as shameless thieves. They steal, make copies of someone else's products and sell them in underground markets at low prices.

They are technologically savvy and can master every mainstream smartphone inside-out. They are able to deliver any device from scratch in days.

That was then. But now, small Chinese smartphone makers who started their businesses by assembling knockoffs are ready to do some honest work this year. Apart from taking outsourcing orders from much bigger vendors, they are also building a new image as global organisations.

In Shenzhen, a Southern Chinese city responsible for roughly half of global mobile phone shipments, the sense of transformation is evident.

"Making knockoffs is no longer what we do," said Sun Wenping, executive president of Shenzhen Mobile Communications Association, a local industry assembler. "We are looking for a new status that fits the new circumstances."

In Las Vegas last week, Sun and about 50 Shenzhen-based phone makers showcased their products at the International Consumer Electronics Show, the biggest event of its kind.

According to a Reuters report, about 1,800 Chinese companies have made displays at this year's International Consumer Electronics Show.

Overseas expos are not just a showcase opportunity for Chinese phone makers: They are signing major business deals at these events, according to Sun.

"Some Shenzhen-based brands already have a strong market share in emerging markets in Africa and Latin America," he explained. "They want to secure their lead in these areas this year."

Manufacturers such as Gionee Communication Equipment Co Ltd, Yulong Computer Telecommunication Scientific Co Ltd and the lesser-known Tinno Mobile Technology Corp have leading positions in a number of emerging markets.

Emerging markets such as Africa, Latin America and the Middle East will be a hot battleground for Chinese phone makers in the years ahead, industry analysts say.

"I think Chinese original equipment manufacturers will affect every global brand in the emerging markets in 2014," said C.K. Lu, a Taiwan-based analyst with industry consultancy Gartner Inc.

Brands ready to make debut on the global stage

"However, I would not be worried about Chinese firms eating into the market share of industry leaders because in fast-growing markets, vendors can still grow the number of units sold without gaining a huge share," said Lu.

Mobile phone owners in less developed markets change their handsets more often than those in developed markets. The trend will give lower-end Chinese makers more room to sell their products, said Sun, who is anticipating another year of rapid growth for small and medium-sized makers.

According to Lu, there are two major trends for Chinese original equipment manufacturers to enter an overseas market.

Some are offering an aggressive price tag US$99, for example to quickly gain market share. The other method is to set the price at the middle point (around $300) with all-around feature sets to lure buyers in high-end markets.

Both strategies are going well for Chinese brands. Sun said almost all the local makers are enjoying a "sizable" profit margin.

Yet Chinese electronic manufacturers may find it hard to enter developed markets including Europe and North America, Google Inc warned in December.

The biggest impressions of made-in-China devices in European markets are that they are cheap but are not good quality. Chinese companies should pay more attention to building brand image before entering top tier markets, it said.

Jack Freifelder in New York contributed to this story.

 

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