Chinese Smartphones Going Global: How OPPO Is Breaking into the High-End Market and Leading the Brand Upgrade Path?

Chinese Smartphones Going Global: How OPPO Is Breaking into the High-End Market and Leading the Brand Upgrade Path?In recent years, Chinese smartphone brands have been vying to enter the high-end market, aiming to challenge Apple. However, the hype in the domestic market seems to overshadow the importance of high-end globalization in overseas markets

Chinese Smartphones Going Global: How OPPO Is Breaking into the High-End Market and Leading the Brand Upgrade Path?

In recent years, Chinese smartphone brands have been vying to enter the high-end market, aiming to challenge Apple. However, the hype in the domestic market seems to overshadow the importance of high-end globalization in overseas markets. Chinese smartphone brands going global has always been a hot topic in the industry, achieving significant progress in recent years. According to IDC data, Chinese brands became the world's leading smartphone manufacturers in 2014, the same year when six Chinese companies were among the top ten global smartphone vendors, reaching a combined market share of 38.6%. Since then, Chinese brands have consistently been key players in the global smartphone market, surpassing other national brands in both manufacturing capabilities and market share.

On the other hand, both domestically and overseas, many people still perceive "Chinese smartphones" as belonging to the low-end and low-priced market. For example, Xiaomi's financial report shows that the global average price of Xiaomi smartphones in the second quarter of this year was only 1144.7 yuan ($158). Meanwhile, Xiaomi ranked third in global smartphone market share during the same quarter. As high-tech products that are inherently "smart," smartphones have long been considered one of the core representations of the transition from "Made in China" to "Created in China." However, after a decade, have Chinese smartphones truly escaped the label of low-end and low-priced in 2024?

Going Global Requires More Than Just Low Prices

According to Counterpoint Research, in 2023, Apple's iPhone sales revenue hit a record $203 billion, accounting for 50% of the global smartphone market revenue for the first time. Even more surprising is that Apple captured nearly 85% of the entire smartphone industry's profits. Notably, the iPhones global market share in 2023 was only 18.8%. In other words, Apple, with just 18.8% of shipments, generated 50% of the global smartphone revenue and captured over 85% of the industry's profits.

This starkly contrasts with Chinese brands. All Chinese brands, along with other known or unknown manufacturers, have painstakingly secured over 80% of the market share but ultimately only receive about 15% of the profits. Doing the hardest and most tiring work but getting the least pay is the silent pain of Chinese brands. For any company or industry, high profits are the core driving force behind attracting corporate innovation and industry upgrades. Therefore, even from the perspective of "making money," Chinese brands must strive for the most valuable high-end market.

Another reason why Chinese brands need to capture the high-end market lies in their already dominant market share. Counterpoint Research data reveals that in 2023, global sales of high-end phones (wholesale price exceeding $600) saw a year-on-year increase of 6%, reaching a new historical high. This marks the sixth consecutive year of growth in the high-end smartphone market. The research firm expects that in 2023, high-end phone sales will account for nearly 25% of the global market share and nearly 60% of sales revenue. Against the backdrop of an overall decline in the global smartphone market, the high-end segment is the only sub-sector exhibiting sustained growth. Global smartphone shipments have stagnated for several years, while the high-end market continues to expand. Therefore, considering both profit and market share, Chinese brands cannot afford to miss this opportunity.

Of course, Chinese brands are not unaware of the significance of the high-end market and are not unwilling to enter it. However, in the competitive world of business, the difference between "knowing how to do it" and "actually doing it" is like going from zero to one. Nevertheless, one Chinese brand is crossing this "no-man's land."

High-End Strategy: OPPO's Alternative Path to Globalization

According to Canalys data, in the second quarter of 2024, OPPO ranked among the top three in the over $500 (approximately 3600 yuan) price segment in 14 countries, including New Zealand, Belgium, and Portugal. In the first half of 2024, OPPO's small foldable phones secured a top-two position in markets like Indonesia, Malaysia, and Singapore. The Find X series of flagship phones experienced a 98% year-on-year increase in shipments in the first half of 2024.

Taking the Mexican market as an example, Canalys data shows that OPPO phones ranked fourth in market share in Mexico during the second quarter, close to the market share of Apple iPhone. However, OPPO's average selling price reached $345 (approximately 2500 yuan) in the first half of 2024, the highest among all phone brands in Mexico, except for Apple. In terms of product layout, OPPO focuses on mid-to-high-end products in Mexico, targeting the $400 (approximately 3000 yuan) price segment, which accounts for 53% of its sales.

Another set of global data further confirms OPPO's firm foothold in the overseas high-end market. According to Counterpoint, in the second quarter of this year, OPPO's global average price was $240, making it the Chinese brand with the highest average price among the top five global manufacturers, significantly higher than vivo's $211 and Xiaomi's $161. This price is second only to Apple and Samsung. It signifies that OPPO's success in the overseas high-end market is not due to a single market but a holistic brand advancement.

In fact, OPPO's journey towards the high-end market since its foray into overseas markets in 2009 hasn't been easy. It was not until 2018, when OPPO had accumulated sufficient overseas market knowledge and operational experience, that it truly launched its assault on the higher-threshold European market. The European market is not only economically developed and boasts great high-end market potential but also has strict standards for product quality, safety, and environmental friendliness. Today, conquering the markets of developed European countries like Portugal and Belgium holds immense market and strategic value for enhancing OPPO's global brand influence.

Since 2014, Chinese brands have consistently held the highest global smartphone share, demonstrating their solid foundation for going global. However, in the high-end market, basic skills are not enough. Just like in car manufacturing, both Mercedes-Benz and Toyota can produce highly acclaimed automotive products, and the latter's annual sales volume is dozens of times higher than the former's. However, it is Mercedes-Benz, with a significantly lower market share, that has ultimately stood the test of time in the luxury market. This is why OPPO's success is not just the success of one company; more importantly, it means that Chinese brands now have a successful model to learn from.

Technological Innovation Is the Only Path to High-End Success

The global market is a touchstone for flagship phones. In overseas markets, Chinese manufacturers' brand influence is significantly weaker, making them more reliant on the inherent value of their products. For OPPO, this is also the core reason behind its stable position in the overseas high-end market.

In 2023, OPPO ranked fourth in China and ninth globally in terms of global patent applications, marking the fifth consecutive year within the top ten globally. Notably, invention patents account for 91% of its total patent applications, indicating a high level of patent value. Entering the AI era, OPPO became the first Chinese smartphone brand to declare AI as its core strategy in early 2024. It announced plans to invest 100 billion yuan in AI technology research and development over the next five years. Subsequently, in February of the same year, OPPO held an AI strategy conference in Shenzhen, launching the first AI phone that applied a 7 billion-parameter large language model on the terminal side. Its main functions include AI image removal, AI call summarization, and a new AI assistant. A few months later, Apple released similar AI services at WWDC.

The advantages that technological innovation has brought to OPPO can be described as "simple and straightforward." In March 2023, OPPO launched the Find N2 Flip, a small folding phone in Southeast Asia. This high-end phone adopts a vertical large external screen, different from Samsungs, offering better practicality. It's also equipped with OPPO's self-developed hinge technology, which is more innovative and allows users to see almost no creases on the unfolded screen. In the second quarter of 2023, Find N2 Flip became the sales champion in the category in Indonesia, securing a 65% market share. In the third quarter of the same year, OPPO's shipments jumped to the top in the Southeast Asian market, with foldable phones contributing significantly. Andy, OPPO's President of Asia Pacific, commented, "It seems that we (OPPO) and Samsung are both in the folding phone form factor, but our user experience is completely different. This is the most important competitive point."

When discussing the growth of the high-end market, Counterpoint's Senior Analyst, Varun Mishra, stated: "The consumer purchasing pattern in the smartphone market has shifted. Now, consumers are