According to a report on the 2015 global smartphone market released by market research organization TrendForce, worldwide smartphone shipments in 2015 hit 1.29 billion, of which 539 million were Chinese mobile phones. This means that in 2015, Chinese-brand smartphones accounted for about 40% of all smartphones sold around the world. In just seven short years, China has gone from the overshadowed worker at the assembly line to a talented designer in the spotlight, exemplifying the drive of Chinese companies in all sectors to go global.
In this report, Cheetah Global Lab has partnered with Libra to use Cheetah's big data to conduct comprehensive analysis of the usage of Chinese-brand mobile phones abroad* (which is not the same as mobile phone shipments or mobile phone sales). In this way, the report will outline the inroads Chinese mobile phones brands have made abroad and the territory they have claimed; it will also paint a picture of Chinese-brand mobile phone users and make forecasts about Chinese-brand mobile phones' development potential.
*Note: For the purposes of this report, “abroad” refers to the 50 designated countries and regions outside of mainland China from which data was collected.
II Global distribution of Chinese mobile phone manufacturers
Note: On this map, the deeper the color, the higher the coverage by Chinese mobile phones in the country or region in question. Gray areas on the map indicate countries and regions not discussed by this report.
Chinese mobile phone brands have already gone global, achieving impressive results in many countries and regions. According to Libra's statistics, Chinese mobile phone brands have over 30% market penetration in Russia, Portugal, Malaysia, Ukraine, and Iran.
In terms of urban market penetration, Espinho, Portugal has the highest market penetration at 43.8%. Chinese mobile phones have different development strategies in mature and emerging markets. Cheetah Global Lab believes that in developed countries, market penetration by Chinese brands in second- and third-tier cities with relatively lower populations is higher, while in developing countries, due to economic and technological constraints, Chinese mobile phones fare better in first-tier cities. BRICS member India and the more mature market of Germany are good examples:
As can be seen in the chart above, in Germany, the cities with the first- and third-highest market penetration are not even among the country's ten most populous cities. The city with the highest market penetration was Gelsenkirchen, a highly industrial city in the northern part of the Ruhr area. Meanwhile, in India, the cities with the highest market penetration were all large metropolises.
III Analysis of users abroad
1. Cheetah Global Lab conducted analysis of users of Chinese mobile phones abroad and discovered that across the board they were young, and their average age did not vary much from country to country.
2. In terms of gender, roughly equal numbers of men and women were users of Chinese mobile phones abroad. Compared to Samsung, female users abroad tended to prefer Chinese mobile phone brands.
3. Looking closer at individual regions, things get even more interesting. The ten countries and regions in which the highest percentage of Chinese mobile phones were male are:
Many are Asian countries and regions.Meanwhile, countries in which female users have the advantage are:
IV Methods of promotion abroad
According to conclusions drawn by Cheetah Global Lab, there are several major feasible methods of promotion abroad for mobile phone brands:
1. Partnerships with carriers
In most countries abroad, carriers have preeminent positions, with enough influence to play a decisive role in the market as a whole. Especially in Europe, the United States, Japan, and South Korea, the smartphone market is directed by carriers. For example, in North America, over 90% of all smartphones are sold through carriers’ channels.
Therefore, for mobile phone manufacturers who want to make moves into a particular country, close cooperation with a carrier is a good bet at success.
Huawei and Lenovo are the best examples of cooperation with carriers. Globally, they have also achieved the best results among Chinese mobile phone manufacturers in their push abroad. Huawei partners with many carriers in Europe, and these partners played a key role when Huawei was establishing retail channels for its own smartphones. At the same time, Huawei can design phone models for European carriers’ businesses that are more in line with their businesses’ modes of consumption.
These better products and better modes of service have given more consumers to think well of Huawei and to choose it. ZTE Corporation, on the other hand, has deeper cooperation with the major US carriers, including AT&T, Verizon, and T-Mobile. Benefiting from these arrangements, most ZTE smartphone products in the US market bear ZTE’s own logo.
2. Partnerships with e-commerce platforms
Along with the rise of the Internet, e-commerce has gradually become a part of people’s lives. Consumer activity once carried out offline is steadily moving online.
In China, Xiaomi, a next-generation manufacturer with the Internet in its genes, utilizes a mode of online marketing, and in a short period of time it has rapidly become one of China’s most important mobile phone manufacturers. Xiaomi’s success in China has also inspired other manufacturers to dream big.
Everyone who was trying to ride carrier partnerships to success has now begun to spend some energy on e-commerce.
3. Sponsoring athletic competitions
In the enthusiasm people in some parts of the world have for physical activity, mobile phone manufacturers in search of exposure see a business opportunity. All the major manufacturers have begun to sponsor athletic competitions. A few years ago, Huawei sponsored Spain’s Club Atlético de Madrid, Paris Saint-Germain F.C., the English Premier League’s Arsenal F.C., and Italy’s Serie A A.C. Milan. Lenovo has sought out NBA stars to serve as spokespeople for their mobile phones. In the 2014 and 2015 seasons, ZTE partnered with the New York Knicks and the Golden State Warriors.
4. Modes of localization and the pursuit of cultural identity
Cultural differences in some areas have led certain brands to fly the flag of “local manufacturing” to win approval from the people there. In actuality, Chinese companies are the controlling shareholders behind the scenes.
Some manufacturers, like Lenovo, which acquired Motorola, and TCL, which acquired Alcatel, achieve their strategic aims overseas by acquiring brands that already have the approval of locals.
V Analysis of Representative Chinese Mobile Phone Manufacturers Abroad
Among Chinese mobile phone brands that have gone global, Huawei, Lenovo, TCL, and ZTE are the more established, traditional mobile phone manufacturers who began early, have strong technical capabilities, and have shipped a large number of mobile phones. There are also emerging mobile phone manufacturers like Xiaomi: they went abroad later, they’re more tapped into the mobile internet, they have more diverse marketing methods, and they have high growth potential in international markets. Cheetah Global Lab has analyzed representatives from among these:
Libra data shows that Huawei is currently among the top ten in 41 different countries across Asia, Africa, the Americas, and Europe, making it one of the best-performing Chinese mobile phone brands. Especially in the European market, Huawei is already a strong competitor, and it has established partnerships with 45 carriers globally. Its partnerships with European brands in particular can be considered a model for Chinese mobile phone brands going abroad.
In 2015, Huawei mobile phone sales broke 100 million sets, a 49% year-on-year increase. Huawei is currently growing very rapidly, and establishing itself as an influential brand amidst fierce competition in the international market.
Acquiring Motorola was an important step in Lenovo’s international expansion. According to Libra data, in 50 major countries and regions across the globe, Huawei is in the top ten in 41 of them, while Lenovo has achieved the same in 30, and Motorola in 16. Combined, Lenovo and Motorola make the top ten in 41 countries and regions, making them equally matched with Huawei.
Motorola has, to a great extent, made up for Lenovo’s lack of presence in mobile phones. In the United States, Lenovo is now putting pressure on ZTE, in Latin America, it has a strong top-three position, and in Europe, it has a respectable market share.
India, home to the largest population of Internet users and the largest mobile communications market outside of China, is an inevitable site for competition among the major companies. With the rapid dissemination of its app SHAREit in India, Lenovo mobile phones have done quite well.
TCL has already had an international presence for a decade, mainly in areas such as Latin America. In countries including Mexico, Colombia, Ecuador, and Venezuela, TCL has a stable position among the first-rank of competitors in terms of sales. In January 2016, TCL Group released a report announcing that its mobile phone sales reached 83,546,000 in 2015, a year-on-year increases of 13.7%.
In a very short amount of time, Xiaomi has rapidly become China’s number-one Android mobile phone brand. As China’s domestic market became increasingly saturated, it duplicated its internet marketing models abroad, reaching for a piece of the pie. India is also another important market for Xiaomi, which chose to partner exclusively with the local e-commerce enterprise Flipkart during its preliminary sales period there. Thereafter, Xiaomi began to partner with two other Indian e-commerce platforms, Amazon and Snapdeal.
At present, Xiaomi has already claimed spots in the top ten mobile phone brands in seven different countries and regions abroad, mainly in Southeast Asian countries and regions that are populous and do not yet have broad smartphone penetration.
As an established mobile phone manufacturer, ZTE, like Huawei, is representative of Chinese mobile phone brands abroad. Unlike Huawei, which has targeted the European market, ZTE already has deep roots in the rather saturated US market.
ZTE entered the US in 1998 and began selling mobile phones there in 2007. At present, it has already established partnerships with almost all telecommunications carriers, such as AT&T, Verizon, and T-Mobile. The data shows that in 2015, ZTE sold 15 million smartphones in the United States, of which 95% were sold through carriers' channels. ZTE has achieved remarkable results in the US market through its many patented technologies and excellent carrier channels.
The OPPO brand belongs to Guangdong OPPO Mobile Telecommunications Co., Ltd, and was established in 2004. One of the leading executives behind it is Duan Yongping, the founder of the brands Subor and BBK.
Much like the two aforementioned famous brands, OPPO mainly targets a younger consumer group. In recent years, OPPO mobile phone ads have appeared on major thoroughfares, narrow alleys, and variety shows, rapidly becoming more well-known in China and increasing its market penetration little by little.
At present, OPPO has performed very well in Asian markets, breaking into the top ten rankings in Indonesia, Malaysia, Singapore, Thailand, and Vietnam.
Compared to other brands, OPPO has a unique strategy: it focuses on its entertainment functions. In terms of positioning, it is one of the few brands in the mid- to high-end range. The future of OPPO, as a brand that has taken "the road less traveled," is very open to the imagination.
VI. Outlook: Chinese Mobile Phone Manufacturers Will Face off with Samsung
Although many Chinese mobile phone brands have made headway abroad, Samsung is still the major player globally, with a leading market share in many countries and regions. Chinese mobile phone brands abroad, with a collective 12% market share in 50 countries and regions outside of China, still find it hard to compete on equal footing with Samsung, which boasts 45% market share.
In contrast to market penetration rate, in terms of the number of times apps are opened and the number of apps used per capita, the numbers for Chinese mobile phones abroad (36.27% and 9.86% respectively) are not very different from those of Samsung (38.41% and 10.11% respectively). This shows that although Chinese mobile phone brands do not have half of the market penetration rate that Samsung does, the activity levels of users of Chinese mobile phones are still rather high.
In the future, given that more and more Chinese mobile phone brands are going global and improving their hardware research and development capabilities, as well as the fact that Samsung's sales stagnated in 2015 (according to IDC statistics, Samsung's sales grew by only 2.1% in 2015), Cheetah Global Lab predicts that in 2016, Chinese mobile phone brands will further narrow the gap between themselves and Samsung.
In 2016, Chinese mobile phone brands will face new tests: how can Huawei find a way to break out without a carrier advantage? Can Lenovo break into the high-end market in Europe and North America? Will Xiaomi be able to repeat its success in China on a global scale? However, as Samsung's growth in the global mobile phone market slows, Chinese mobile phones also face an unprecedented opportunity. Xiaomi and Huawei have already surpassed Samsung in China's domestic market, and abroad, Chinese mobile phone brands have a lot of as-yet untapped potential.
Notes on data used:
1. Except when otherwise specified, data comes from Cheetah Mobile's two billion installations and 567 million monthly users worldwide;
2. This report focuses on the research of the current state of active mobile phone brands abroad, and not on mobile phone shipments or sales;
3. Fifty major countries and regions outside of Mainland China were selected;
4. The statistics were collected via the everyday functions of Cheetah Mobile products, and were in accordance with related laws and regulations;
5. Analysis was only conducted of the state of development of mobile phones running Android operating systems abroad;
6. Statistics were influenced by the user scale and distribution of Cheetah Mobile products.
This report was originally developed by Cheetah Global Lab (Facebook: CheetahGlobalLab). Those who repost it must indicate its original source.