Chinese phone firms target global markets
As Apple launches its 5C iPhone to compete in the Chinese market, Chinese companies are looking to the West to grow. However successful in their home market, they should carefully consider their global strategies. The Chinese demand cheap devices offering
Along with Huawei and ZTE, there are three interesting Chinese companies with ambitions to take their smartphone businesses international – Lenovo, Yulong Coolpad and Xiaomi.
The first and most successful is Lenovo, which is second only to the Korean giant Samsung in China. Lenovo understands the next wave of innovation will be the integration of all devices to create one harmonious user experience.
Coolpad is associated with quality on the Chinese market. Last year, the first Coolpad device was released in the United States. Coolpad’s strategy is to offer better quality budget devices in the US than its competitors, but by entering the market with low-cost handsets, it will be difficult to offer high-end smartphones at a later date.
Xiaomi, the smallest of the Chinese smartphone vendors, focuses on monetising its users with software and services. Its laser focus on high quality devices at affordable prices is best suited to emerging markets. Mature Western markets are less focused on price. Xiaomi will have to compete with Apple, Google, Amazon and a host of other service companies such as WhatsApp and Facebook that have a much larger presence and mind share.
Lenovo is the most likely to break into Western markets in the short term, thanks to its innovation focus. Coolpad may struggle to expand overseas, as it is almost unknown outside of its country.
The wildcard is Xiaomi. With prices of devices falling and margins shrinking, many companies will look to adopt Xiaomi’s model. It should prove that this model can be profitable in China and then move to India, Indonesia and Brazil, where low-cost, unsubsidised smartphones are in demand.
