Chinese smartphone makers closing the gap with Samsung in Malaysia
KUALA LUMPUR -- Jennifer Chin recently upgraded her smartphone, opting for a Huawei P10 lite for better functions and value for money. "I wanted to try something new," said the college student, who tossed her old Oppo, a Chinese brand.
As in other parts of the world, people of Chin's generation, in search of an enhanced user experience at lower prices, have been shaping the mobile phone market in Malaysia.
In a market that averages 1.34 mobile phones per resident, phone makers are gnawing away at each other's markets with improved features and rock-bottom prices.
In the first nine months of the year, 7 million smartphones were sold in Malaysia, and that number is projected to hit close to 9.8 million units in 2017, according to market research firm IDC. "This indicates a recovery for the Malaysian market, as shipments have picked up again, growing 13% year on year," said IDC senior analyst Jensen Ooi in a recent interview.
Although Samsung Electronics maintains the top market position at about 40%, Chinese makers Oppo, Vivo and Huawei Technologies, with a combined share of 30% as of the end of September, are closing the gap with aggressive marketing and a wide range of models.
"Chinese players have been able to successfully establish themselves in the industry, a trend that has not only been catching on in Malaysia but similarly across the region as well," said Ooi.
Matured smartphone users are seeking good specs-to-price ratio models, upgrading from their ultra-low-end, below 400 ringgit ($98) phones to mid-range ones priced at 850 ringgit to 1,700 ringgit, he added. Chinese makers fit into this category.
"Oppo understands youngsters best," said Nikki Chen. The branding director for Oppo Malaysia was speaking in Kuala Lumpur last month at the launch of the company's latest model, the F5, which boasts advanced artificial intelligence beauty recognition technology, that the company says allows users to capture "perfect selfies anytime."
Taiwanese singer Yoga Lin, fourth from left, and other Malaysian celebrities attend the launch of a new Oppo smartphone on Nov. 2 in Kuala Lumpur.
Along with an aggressive marketing strategy of engaging local celebrities as brand ambassadors and selling products through retail outlets, Oppo has emerged as the second top-selling mobile phones in Malaysia, only four years after entering the market. It accounts for 38% of total market share of mid-range products as of the end of September, according to Oppo Malaysia. Sales by value rose 187% in 2016.
As part of its efforts to understand its customers better, Oppo has about 6,000 retail vendors that market its products. That number is about two-thirds of total mobile phone vendors in the country, indicating Oppo's strategy to push products through physical outlets rather than e-commerce.
Oppo, a young smartphone maker that grew out of an audio equipment company, is now the fourth-largest smartphone maker in global terms, selling nearly 100 million units annually. The Chinese consumer electronics manufacturer is currently present in about 30 markets and set to start selling handsets in Japan in the spring.
The same strategy is adopted by rival Vivo, whose market share is currently about 10%. Mike Xu, Vivo Malaysia's chief executive, said it plans to double that by the end of next year through advertising, sales through dealerships and attractive promotions.
Another maker, Xiaomi, which famously sold its products online-only when it came onto the market a few years ago, has begun retailing through its own physical shops, opening three in Malaysia so far this year. It calls it the "new retail" concept, which integrates both online and offline operations that offer other electronic gadgets besides smartphones to improve marketing efficiency.
A phone dealer in Kuala Lumpur said Xiaomi had to resort to such strategy in order to compete with the likes of Oppo and Vivo, which provide after-sales service through outlets.
IDC's Ooi said new features, including dual cameras as well as wider 18:9 ratio screens with greater resolution, will be the next "wow" factor and trendy end-users will be looking out for next year. "These features that were exclusive to only flagship phones have started to become more mainstream," said Ooi. "Vendors will leverage them to drive sales, unlike previously when it was just about good spec-to-price ratio."
Nikkei researcher Ying Xian Wong in Kuala Lumpur contributed to this article.
https://asia.nikkei.com/Business/Trends/Chinese-smartphone-makers-closing-the-gap-with-Samsung-in-Malaysia
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