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Chinese handset makers, having won over users at home and in emerging markets, are making a push into Europe with Xiaomi — once the world's most valuable unicorn — preparing to ship "hundreds of thousands" of phones to Spain.
Xiaomi, like peers Huawei, Oppo and Vivo, is banking on its sophisticated handsets and cheaper price tags to win share from global giants Apple and Samsung. By some measures, Chinese smartphone makers are catching up fast: Counterpoint consultancy puts Huawei's global market share in the third quarter at 9.8 per cent to 11.7 per cent for Apple — although that is the quarter when Apple buyers may have held off ahead of the new iPhone launch.
Speaking ahead of a trip to Madrid, Wang Xiang, who will head up Xiaomi's global expansion, said the move into western Europe was a milestone. "Spain is our first stop in the developed market," he said.
Vivo, for its part, is targeting Russia as its first foray into Europe. Xiaomi, Vivo and stablemate Oppo have been hugely successful in India, a market where Chinese handset makers dominate. While Xiaomi has come undone in the past from its bold ambitions, it has turned round its fortunes.
To smooth their path into developed markets, Chinese companies are banking on patent acquisition and the growth of online sales and marketing.
"One of the advantages is that there's no national border in the internet world," said Mr Wang. "The European continent is all connected, so if we can do well in Spain, other western European countries will be much easier for us; [it's] just a matter of time."
In the past, he said, observers had highlighted Xiaomi's patent issues. "But over the past three years, we made big progress in patents. We have applied for 16,000 to 18,000 patents and we have got over 4,800 patents around the world, also including the patents we acquired from Intel and Nokia."
However, analysts see patents as one of the biggest tripwires for Chinese device makers. Pointing to the big troves of intellectual property held by the likes of Ericsson and Nokia, Counterpoint research director Peter Richardson noted that "Europe is an environment where IP is asserted very strongly and they are waiting for [Chinese players] to put their heads above the parapet and then clout them with IP lawsuits."
Huawei has largely avoided this given its own large IP portfolio, he added.
As in other markets, Xiaomi plans to sell in Europe through both online platforms and physical stores.
Vivo and Huawei, meanwhile, have used splashy sponsorships and celebrity marketing to woo buyers overseas. Huawei has co-opted actress Scarlett Johansson while Vivo has gone for sport, sponsoring the Indian Premier League in 2015 and will sponsor the Fifa World Cup until 2023.
"Overseas markets are very important to us," said Alex Feng, a vice-president of international business at Vivo, which plans to launch in Africa early next year.
RecommendedHuawei, which earns more than half its smartphone revenues from outside China, says it is winning share in European markets including Spain, Italy and Germany. It had a market share of nearly 15 per cent in western Europe last year, according to GfK analysts.
The Shenzhen-based group, which also supplies telecoms kit, has benefited from bundled distribution deals with carriers. Xiaomi does not have this luxury, noted Ben Stanton, analyst at Canalys, "so its progress will not be as stunningly fast as Huawei's. But as older brands such as Alcatel, HTC and LG Electronics . . . increasingly fall out of carrier portfolios, Xiaomi has an opportunity to step up and fill this gap."
Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.Source: Chinese smartphone makers dial into Europe
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