/Cheaper but not Cheap – Secrets of Oppo and Vivo’s rise in China (Updated)

Cheaper but not Cheap – Secrets of Oppo and Vivo’s rise in China (Updated)

You may be surprised at market research company IDC China’s recent findings on China’s smartphone market for the fourth quarter of 2016. Smartphone manufacturer Oppo beat Huawei and Xiaomi to the top spot for the first time with shipments of its phones at 24.5 million.

Following Oppo on the list are Huawei and Vivo, Oppo’s brother company from BBK Electronics Corporation. In all, the combined smartphone market share of these two BBK Electronics companies in China – Oppo and Vivo – stand at 34.1%. That means for every one out of three smartphones owned in China, it is either Oppo or Vivo. Here are some reasons why this happened.

Offline store strategy

Both Vivo and Oppo have focused on offline stores for years. They are very willing to develop franchisees, and they’re able to give high profits to those franchisees. They agree to take back older models of smartphones, and exchange a portion of its money value towards the next product order for franchisees. They provide significant bonuses for the best selling franchisees.

Oppo has operated over 200,000 offline stores around China, as of 2016. They initially focused on urban markets, but also they have started to expand out to cover more rural markets.

Cheaper but not cheap

Vivo and Oppo are aiming to manufacture mid-range smartphones. They are following the most updated Android operating systems, carrying mid-to-high level hardware. For example, the Vivo X7 series uses Qualcomm MSM8976 Snapdragon 652 chipsets, Octa-core CPU, internal 64 GB storage, 4GB RAM, and has a 1080 * 1920 pixels resolution, all in a phone selling for around USD 400. Those technologies are not cheap, but this price is much cheaper in comparison to Samsung, Apple and even the Huawei P9 series.

Star impact

Vivo and Oppo have successfully used “star impact” to push their branding. Both of them have sponsored many events: sports, variety shows, TV dramas, and movies. They are hiring the hottest pop stars to be their spokespersons. These marketing strategies have paid off well for both Vivo and OPPO.

Knowing the value of offline marketing, building the “Cheaper but not Cheap” smartphones, and harnessing star impact, Vivo and Oppo are beating down the big three of Samsung, Apple, and Huawei in China 2016. If they maintain the momentum of their success, they will have a very bright future and could become market leaders for a long time in China.

Wilson Lei contributes AllChinaTech. He has worked for 10 years in the tech industry and holds a Master's degree in Software Systems at UBC in Canada. He is passionate about gadgets, soccer, and beer.