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The smartphone market is changing – and its rising stars are China’s own device makers. MEF Minute explores who these new players are, and how they have changed the landscape.

Five years ago, Chinese phone maker Xiaomi didn’t exist. Today, it is the biggest seller of smartphones in its home country. According to IDC, Xiaomi edged Huawei and Apple with 15 per cent of a market that purchased 117.3 million smartphones in Q4 2015 alone.

Indeed, stats from Counterpoint Research show that nine of the top 12 smartphone brands in the world are now Chinese.

That has left a door open for the new Chinese OEMs.

To date, most of their success has been in the domestic market. There are good reasons for this. Chinese smartphone makers benefit from tax breaks and other forms of government support, and they can exploit the local manufacturing infrastructure of Shenzhen, whose factories can build smartphones with high end specs at very low cost.

They also tend to keep their costs lower than Samsung et al, with their huge marketing campaigns and expensive retail relationships. Chinese OEMs like Xiaomi and OnePlus in particular sell a huge number of phones direct to consumers through online channels like WeChat. And they shift millions in uniquely Chinese events like Single’s Day.

With a population of 1.35 billion, the Chinese market is well worth targeting. It is the world’s largest country, with 316 million people than the US. And it has 160 cities with 1 million or more people living in them.

However, there’s no doubt that the Chinese phone markers want to sell their goods everywhere. They have already made good progress in India, Africa and Brazil (though they face comepetition from local brands in these markets – brands that ironically have their devices assembled cheaply in China).

Without doubt China’s OEMs would love to ‘crack’ the US. But this will be extremely challenging because the US market is structured so differently.

US customers tend to buy smartphones from operators, who decide which devices are ranged and how these devices are technically set up. Thus, manufacturers who want to penetrate the US market must work closely with carriers.

Screen Shot 2016-03-08 at 15.34.41These relationships don’t happen overnight. Hugo Barra, the global VP of Xiaomi, recently declared his company’s desire to sell in the US, but admitted: “It’s the hardest market to enter. There’s so many frequencies, the carrier requirements are so steep, but at the same time, if we manage to launch a phone in the US, from an engineering perspective, we’ve arrived.”

Huawei is a telco infrastructure giant. But in the early part of the decade, it also set out to challenge in the smartphone space. It launched flagship brands like Ascend and spent big on marketing. In 2015, Huawei ranked second in its home market with 14.5 per cent (but came top in Q4).

In 2013/14 Lenovo broke away from its PC roots to become recognised as a player in mobile. It had bought IBM’s laptop business and did something similar in mobile when it acquired Motorola from Google for $2.9bn.

Two years ago, Xiaomi didn’t trouble the top 10 smartphone market share list. Now, it wavers between third  and seventh with around four per cent. It mostly sells online; famously it shifted 150,000 phones in 10 minutes on WeChat. It had a tough 2015, targeting sales of 100 million smartphones, which it missed. But it’s growing fast in wearables and smart home.

The handset subsidiary of the giant ZTE Corporation is the world’s ninth biggest phone maker according to Gartner. It’s done better in the US than most of its compatriots. Actually it sells more in the US than at home. ZTE made a big push in 2011 with premium devices like the Skate, but these efforts fizzled out. Now, it’s trying again with the $450 Axon.

OnePlus is an independent spin-off of Oppo. Its first phone ran on the CyanogenMod OS and was available through in invitation only. The strategy was scrapped for the sequel phone, but reviewers still raved about the build quality at a mid-range price.

OppoScreen Shot 2016-03-08 at 15.24.06
Now solidly China’s third biggest phone maker after Huawei and Xiaomi. Oppo has made a big play on thinness, claiming its Oppo R5 was the skinniest device ever made. It also tried design flourishes like the swivelling top-mounted camera on its N1 device.

Tecno has made the most headway in Africa. It’s a big player in Nigeria in particular, and currently sells around 12.5m handsets across the African continent every quarter.

The formerly French phone maker was bought by Chinese television giant TCL in 2013, which re-branded it as Alcatel OneTouch. It dropped the OneTouch at MWC 2016. The firm is currently among the Chinese phone makers targeting the US and Canada hard, having increased its marketing investment by six times. Its current focus is the Idol 4S, which even comes with a Google Cardboard-compliant VR viewer.

At one point, According to IDC, China’s Coolpad sold more devices in its home market than either Apple or Samsung. It is currently well established in the top 10 domestically. Coolpad has actually been around since 1993, making white label devices for big operators like T-Mobile. But it emerged as its own brand on the back of the Android boom.

Gionee has a long history in consumer electronics, starting out in 2002 in video and DVD. By 2005, it was a phone maker with its own manufacturing facility in Dongguan. It sells around 25 million handsets a year compared to Samsung’s 400 million, but it still thinks it can be top five inside five years.

Little known outside China, but growing hugely in its domestic market. In 2015, Meizo grew its sales by 350 per cent to hit 20 million. Its models include the Pro 5, MX5, and M2. Maizo is also known for its support of the Ubuntu OS.