This story is part of Generation China, CNET’s series exploring the nation’s technological ambition.
Apple, Samsung and Huawei have long been mainstays on the global smartphone leaderboard, but in recent years there’s been a string of new players. Xiaomi, Oppo and Vivo might sound unfamiliar to most Americans, outside a tech-savvy bubble, but they’re right up there with the world’s top brands.
While Samsung wears the crown as the world’s largest smartphone company and Apple still pulls in the most profit, Chinese phone-makers have ascended rapidly worldwide and are displaying resilience amid the coronavirus pandemic. Huawei surpassed Apple to become the world’s second largest seller of smartphones last year, achieving this coveted milestone without selling any phones in the US, and briefly eclipsed Samsung in April. A Shenzhen-based phone company, Transsion, meanwhile, has overtaken Samsung as the No. 1 phone supplier in Africa since its launch there in 2018.
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“Chinese smartphone-makers have captured around 40% of the global market share, showing that Chinese firms are increasingly capable of building consumer products with global appeal,” said Dan Wang, technology analyst at Gavekal Dragonomics, a research firm.
In addition to enticing shoppers around the world to buy their handsets, Chinese vendors have worked hard to shed the reputation that they’re merely cheap copycats — they’re starting to drive innovations such as foldable designs or pop-up cameras, which offer a window into the future of smartphone technology. Royole, a Shenzhen-based company, unveiled the world’s first flexible smartphone, beating Samsung to the punch, although the South Korean electronics giant is often mistakenly credited for it. Nevermind that it was a spectacular failure. Xiaomi, meanwhile, unveiled the first trifold foldable phone that much of the world had ever laid eyes on. Vivo and Meizu both made waves when they released phones without a single physical button and almost no ports.
Generation China is a CNET series that looks at the areas of technology where the country is looking to take a leadership position.
Along with these innovative designs, Chinese phone brands are increasingly churning out high-end phones and pushing price boundaries, aiming to transcend their budget phone image and compete with the likes of Samsung and Apple after focusing on the budget or entry level market for years. Critics say they still have a long way to go.
“These competitive pressures drive changes in pricing, innovation and marketing, but I’m not convinced that Chinese vendors, aside from Huawei previously, pose a significant threat to Apple’s brand,” said Tuong Huy Nguyen, senior principal analyst at Gartner. “Apple is a high-end brand and an ecosystem-driven experience.”
To be fair, China’s smartphone industry has witnessed its fair share of failures along with the meteoric rise of companies like Huawei and Xiaomi as the smartphone market consolidates. Gionee, a Shenzhen-based manufacturer that was among the first Chinese firms to break into the lucrative Indian market, went bust last year. There was also Vsun, a Chinese contract manufacturer that laid off all its employees on the same day it filed for bankruptcy in May last year. Small players have been squeezed even tighter amid the coronavirus pandemic, which has resulted in Chinese phone-makers refocusing their efforts back to their home market, according to industry analysts.
But the rapid emergence of China’s phone-makers on the global stage underscores the country’s rising technological prowess. It comes as Beijing seeks to catch up and eventually overtake the US as the global technological leader across 10 high-tech sectors including robotics, semiconductors and even electric vehicles, as part of Chinese President Xi Jin Ping’s ambitious master plan known as Made in China 2025. It’s this very plan that fueled the costly trade war between Washington and Beijing. In May, Beijing unveiled a follow-up plan that details China’s involvement in setting the standards for key tech like 5G.
Still, some Chinese phone-makers are poised to gain market share from Apple and Samsung in the second quarter despite the coronavirus pandemic, which has ravaged the global economy and disrupted supply chains, according to a TrendForce report published in April.
But who are the key players? The following is a breakdown of all of the Chinese phone-makers you should know, according to how recognizable they are in the US.
US chipmakers continue to sell product to Huawei, despite a Trump administration ban on the sale of US technology to the Chinese telecom giant.
Of all the Chinese phone manufacturers on this list, Huawei is probably the name that needs no introduction. It’s the world’s second largest smartphone company, and it’s at the center of an international battle for technological dominance between Beijing and Washington.
Once virtually unknown to most Americans, the telecommunications giant was splashed across newspapers when top executive (and daughter of the company’s founder) Meng Wangzhou was arrested in Canada for an alleged violation of US sanctions with Iran. Since then, the Chinese telecom has regularly made international headlines, especially since the US Commerce Department banned American companies from doing business with Huawei without first obtaining a license.
For Huawei, that meant it could lose access to crucial technological parts including semiconductors, which are key components used in its base stations and phones. It also meant Huawei’s handsets were cut off from the full power of Google’s Android operating system, along with several popular apps including the Google Play store, Gmail, Google Maps and apps that rely on Google like Uber and eBay.
At its launch in September, the Mate 30 was Huawei’s first major phone to launch without Google’s proprietary apps. Despite US efforts to constrain Huawei, the company reported first-half earnings this month showing revenue grew more than 13% from a year ago to around $65 billion.
But in May, Washington tightened its entity list measures in a move that blocked Huawei’s global chip supply from key supplier’s like Taiwan’s TSMC, which could put Huawei’s future in genuine jeopardy. “It might cripple Huawei, which I consider China’s most important technology company,” Wang said.
ZTE launched the Axon 10 series in the US last year, which marked its comeback into the United States after being swept up in a trade fight with the Trump administration.
You may remember ZTE from when it got embroiled in a trade fight with the US government. Once the fourth largest phone vendor by market share in the US, ZTE saw its operations come to a grinding halt after the Commerce Department in 2018 barred the state-owned Chinese telecom from buying components from American companies over sanctions violations.
Although the ban was lifted several months later as the result of Trump’s surprise intervention, ZTE paid the US $1.4 billion in penalties, the Chinese telecom took a reputational hit and suffered a $1 billion loss in 2018.
The 35-year-old company had spent years building its brand in the US, where it sold low-cost smartphones through wireless carriers including AT&T and Verizon, selling 19 million phones in 2017, according to Canalys. It had achieved what none of its homegrown competitors had been able to in the US. Much of that evaporated with the controversy.
Last year, ZTE quietly reentered the US market with its “comeback phone,” the Axon 10 Pro, its first major phone launch since it was banned. Still, industry analysts say they have doubts over whether ZTE can shake off the impact of the US ban even after installing company veteran Ni Fei at the helm of its consumer electronics business.
“ZTE is expected to face challenges from both its Chinese competitors and the US-China tensions,” said Will Wong, research manager at IDC Asia Pacific. “Since ZTE has been banned by the US in the past, the current tensions between the US and China are expected to make its channel players more cautious while working with them.”
Lenovo is a giant in the PC industry. It can even lay claim to the world’s first 5G laptop. But it’s also the owner of one of the most iconic American phone companies: Motorola, which it bought from Google for a cool $2.9 in 2015. Still, it’s been a long road back to the black for Lenovo’s phone business. After years of bruising losses and layoffs, Lenovo’s mobile unit turned a small profit last year, its first since it acquired Motorola, thanks to a “clear focus on selected markets, a competitive product portfolio and expense control.” This year, the company released a string of phones across the price spectrum under its Motorola label like the revamped Razr, and it’s gearing up to release its Legion-branded gaming phone as the company seeks to grow those gains in its phone business.
Launched this month, the Nord is OnePlus’ inaugural midrange phone from a brand-new line by the same name.
Unlike most of its Chinese competitors, OnePlus has emerged as an unlikely success story in the US, breaking into the brutally competitive American smartphone market within the seven years of starting out. The young company, which has roots in tech metropolis Shenzhen, started off there as an online-only supplier of high-end yet affordable phones.
But it truly broke into mainstream America in 2018 when it launched the 6T flagship series with the support of a key US ally: T-Mobile. It was the first time OnePlus had the backing of a major US carrier, which marked an important milestone for OnePlus since most Americans still buy their phones from carriers. It also meant that the phones would be available in T-Mobile’s vast network of retail stores around the country.
Jump ahead to 2020, and OnePlus is one of the fastest-growing smartphone brands in the US after its phone sales more than tripled in 2019, according to Counterpoint Research. Although its market share remains minuscule compared to those of Apple and Samsung, it has managed to snatch a small slice of the pie from both juggernauts, as well as curry favor with some of the most discerning gadget enthusiasts out there.
In April, it launched its OnePlus 8 flagship series amid the coronavirus pandemic with the backing of Verizon, and is set to launch the more wallet-friendly Nord this month via an augmented reality launch.
Xiaomi’s flagship for this year is known as the Mi 10 series.
Xiaomi is one of China’s earlier homegrown success stories. Founded in 2010, Xiaomi, which was once widely ridiculed for blatantly copying Apple, has matured into one of China’s domestic champions, shipping more than 124 million phones in 2019 in more than 90 countries worldwide.
For many years, Xiaomi’s not-so-secret weapon has been selling quality phones at near cost. It has even released a $100 phone. This low-margin strategy has helped Xiaomi cultivate a loyal fan base, especially in price-sensitive countries in Asia like India, where its slick Android phones often sell out within hours of release.
Xiaomi generates most of its revenue from selling phones, but recurring revenue from the sale of software and services that ride on its phone allow the Beijing-based company to sell its handsets for cheap. It also sells a portfolio of its own smart products to help boost its brand.
In addition to phones, Xiaomi relies on a portfolio of smart products including bedside lamps and air purifiers to help build its Mi brand internationally. An upgraded electric scooter (pictured above) was launched in July.
Screenshot by Sareena Dayaram/CNET
In recent years, however, Xiaomi — like many of its rivals — has prioritized selling more high-priced phones as the global smartphone industry and its margins shrink. This strategy seems to have paid off, with the company reporting nearly 14% revenue growth in the first quarter despite the business challenges of the coronavirus pandemic. It stands in contrast to Samsung and Apple, which have both warned of a challenging year ahead.
Oppo and Vivo
Vivo has broken ground for a 32-story highrise, which will house its headquarters, in the southern Chinese tech metropolis of Shenzhen. It’s scheduled to be completed by 2025.
If you’re not familiar with the name Vivo, there’s still a good chance you have seen some of its phones, which appeared in Marvel’s blockbuster Captain America: Civil War. As with its older and larger sibling Oppo, the Chinese phone-maker’s trademark marketing style involves using high-profile product placement and sponsorships to win over European shoppers. Although Oppo and Vivo aren’t household names in the West, both have vaulted up the global rankings to place within the top six smartphone manufacturers in a comparatively short period of time, due partially to the popularity of their affordable phones among young consumers.
Oppo and Vivo (along with Xiaomi) are expected to have gained even more market share in the April-to-June quarter despite the pandemic, according to IDC. That’s mainly because both companies enjoy a strong foothold in Asia, including the world’s two largest smartphone markets, China and India, where most of their regional sales are generated, according to Wong. Even though Oppo and Vivo stress that they’re competitors, both companies were spun out of the same parent company. BBK Electronics is a privately held, media-shy Chinese conglomerate believed to be the world’s third largest manufacturer of smartphones. Along with Vivo and Oppo, it counts OnePlus and RealMe as part of its stable of brands.
RealMe is the baby of the bunch, a 2-year-old company founded by a former Oppo executive. RealMe phones found success quickly because they were cheap but juiced up with cutting-edge technology.
Last year, the company, which is also owned by BBK Electronics, said it shipped 25 millions phones — a figure it hopes to double by the end of 2020.
“Their connection with Oppo allowed them to form a partnership with channel players in a more efficient way, which might be difficult for new smartphone-makers as channel players may not be familiar with a new brand,” said IDC’s Wong.
The brand originally piggybacked on Oppo’s success, and was known back in 2010 as Oppo Real before it spun off into an independent division. It also rapidly entered new international markets, finding success in India and parts of Europe in recent years. Earlier this year, the company unveiled its first 5G phones as part of a push toward the premium end of the market.
Playing with TCL’s triple-screen foldable
TCL is the new kid on the smartphone block — after a fashion. The Shenzhen-listed company has had a long history of designing, manufacturing and marketing phones under brands that are not its own: TCL has produced handsets carrying the Alcatel name, the once-popular Blackberry brand and even has the tiny Palm handset.
In April, the company, better known for making televisions, launched the moderately spec’d TCL 10 series, the debut line using its own brand that included a 5G phone, internationally.
But the Chinese company is also vying to become the next big name in foldable phones, teasing radical designs including a trifold phone and a rollable phone.
Founded in 1981, the Chinese consumer electronics company built its reputation selling value-for-money TVs that mostly kept up with competitors in terms of specs.TCL will continue selling these TVs along with the bevy of consumer electronics under its portfolio, but it’s aiming to boost its brand through the more personal smartphone, echoing a strategy employed by industry giants Samsung and LG.
The Meizu Pro 6 (center) looks a lot like an iPhone.
Formerly a maker of MP3 players, Meizu was one of the earlier Chinese firms to make a foray into the hypercompetitive world of smartphones. The Zhuhai-based company rolled out its first phones in 2009, quickly becoming a force to be reckoned with domestically, and eventually entering overseas markets like India and parts of Europe.
At its height, it was China’s sixth largest domestic manufacturer, shipping approximately 20 million smartphones in 2015, which was a 350% jump from the year before. Huawei sold about 100 million in 2015. In a sign of confidence in its business that same year, Meizu garnered a near $600 million investment from Alibaba, as part of the e-commerce behemoth’s push of its own mobile operating system into Meizu’s popular handsets.
But Meizu has failed so far to break into the upper strata to join the ranks of China’s smartphone elite. Today, the once high-flying company is struggling to stay afloat amid the consequences of misguided business decisions that included the over-release of smartphones and intensifying competition from its homegrown rivals. As players with more financial firepower refocus on the Chinese market, “there is little room left for smaller vendors,” said Canalys research analyst Hattie He in a 2018 report.