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With Huawei facing hurdles in Europe, Chinese smartphone brand Oppo eyes expansion

Written by South China Morning Post Published on 

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Oppo’s Europe sales grew 41% year-on-year in the second quarter of this year.

With Huawei Technologies facing declining sales in Europe, fellow Chinese smartphone maker Oppo is stepping up efforts to expand in the region. “The European market is definitely key to Oppo entering the high-end segment and its international plans,” Oppo’s western Europe president Maggie Xue said in an interview with the South China Morning Post last week.

“We have ambitious but achievable goals for Oppo’s development in western Europe, and hope to become a brand that local consumers love and trust in three to five years,” she added, while declining to disclose the specific goals.

Chinese smartphone vendors accounted for 35% of the Europe market in the second quarter, according to research firm Counterpoint. Of these, Huawei had the largest share of the market—16%—while Oppo, a newer entrant, only had 3%.

However, Xiaomi and Oppo saw their Europe sales grow 55% and 41% respectively as they filled the void created by Huawei’s 46% decline in year-on-year sales in the quarter, Counterpoint data showed.

“With their attractive specs at affordable prices, [Xiaomi and Oppo] managed to woo some potential Huawei users to gain share at its expense,” said Abhilash Kumar, research analyst at Counterpoint in a report.

Huawei, a leader in next generation 5G networks, is considered a national security threat by Washington, which has restricted the Chinese company’s access to US products and services including Google’s apps like Gmail and YouTube. That has hampered its ability to sell smartphones to Western consumers.

Fifth-largest smartphone brand

Oppo, which was established as a budget handset manufacturer under BBK Electronics in Dongguan, Guangdong, has grown to become the world’s fifth-largest smartphone brand. It has a strong presence in lower-tier Chinese cities and developing markets including Southeast Asia.

It has recently sought to court consumers in Europe, where smartphone users are more willing to shell out money for premium models and the market is dominated by mid- and high-end devices.

Earlier this year, Oppo launched the Find X2 Pro, its most expensive smartphone ever. The 5G model was released in Europe at a retail price of EUR 1,199 (USD 1,415) in May.

“In the absence of Huawei’s [Google-equipped] mobile devices, Oppo does have an opportunity in these price segments with a caveat: To ask for a premium price tag, clients must be aware of the brand and associate it with a high-end experience,” said Marta Pinto, research manager at IDC.

Read this: Oppo releases “fastest” wireless flash charger

“Oppo is in a good position so far as it has businesses across other regions and does not depend exclusively on European markets to survive,” Pinto said, adding that the company can afford to take the time to learn about the market and build its business network.

Next-generation 5G networks are a major component of Oppo’s Europe strategy, according to Xue. “Although the development of 5G will not be smooth-sailing and will experience twists and turns, it is the trend and the future,” she said.

While Xue said the roll-out of 5G will be slower in Europe than in China, she added that there will be market opportunities in the area that “should be seized” in the next two years.

Oppo recently partnered with major European players Orange, Vodafone, Deutsche Telekom, and Telefonica for the roll-out of its 5G handset. It also launched an advertising campaign with popular European football club FC Barcelona earlier this month.

Headwinds at home and abroad

The company’s further push into the region comes at the time when it faces stiffer competition at home, with Huawei doubling down on efforts to expand domestic sales amid its troubles overseas. Oppo’s domestic sales fell 20% last year, according to market research firm IDC.

It is also facing headwinds in India, where it is the fifth-most popular smartphone brand. In June, it had to cancel the live-streamed launch of its flagship Find X2 phone in the country amid calls for a boycott of Chinese products after a violent clash between Indian and Chinese troops along their disputed Himalayan border.

Xue said she was not too concerned about the company’s market share in Europe, or about how much of the company’s business would come from the region. “We feel that figuring out how to become strategic partners to local customers is more important and worthy of our attention than sales numbers themselves,” she said.

She added that Oppo’s operations in Europe will “provide the momentum for technological innovation” and that talent from the region, especially in London, can be a resource boost for the company overall.

“We think that we have a deep understanding of the challenges and value of the European market,” she said. “I know this is not an easy task, [but] it’s a technological marathon.”

This article was originally published in the South China Morning Post.

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