Chinese smartphone makers set their sights on Europe's premium market - FT
Kyiv • UNN
Realme plans to double its share of the European market to 10% within 3-5 years. Chinese manufacturers are actively investing in the promotion of premium smartphones in Europe, competing with Apple and Samsung.
Chinese smartphone makers are stepping up efforts to strengthen their position in Europe and sell highly profitable premium devices, with one of the world's fastest growing brands aiming to more than double its market share on the continent over the next three years, the Financial Times reports, according to UNN.
Details
Shenzhen-based Realme, which, according to analysts, increased sales in Europe by 275 percent from 2020 to last year, says it is targeting a market share of more than 10 percent over the next three to five years, up from 4 percent.
Now the fourth largest supplier on the continent, the phone maker was the first to reach the 100 million global phone shipment mark in 2021 and the fifth to reach 200 million last year, despite a slowdown in the smartphone market, according to a study by Tech Insights and Counterpoint Research.
“If Realme can succeed in the European market, our whole brand will be greatly enhanced, and it will help our sales around the world,” said Francis Wong, head of product marketing at the company. - “Our whole strategy is to start at the bottom and work our way up.
However, he warned that marketing costs associated with sales to European customers loyal to Apple and Samsung were more than 10 times higher than in India, the company's first major market when it became an independent organization in 2018.
European consumers are said to be less aware of Chinese brands and less concerned about value for money, meaning that the company's growth on the continent has been slower than in other markets where it has doubled, tripled or quadrupled sales in just a few years, he added.
“We are used to such fast growth. So, when we came to Europe, we found that this market is not as easy as we imagined,” Wong said.
According to Counterpoint, Apple and Samsung still dominate Europe, especially in the premium segment. They accounted for 94 percent of phones sold for more than.700 in the second quarter of this year. The last External competitor to claim nearly 10 percent of the European premium market was Huawei, which rapidly increased its sales share until it was gradually replaced by US sanctions and bans in some countries on the use of the company's equipment on 5G networks from 2020.
Real me started its life as an offshoot of Oppo, which was a brand owned by the electronic group BKK. The Dongguan-based conglomerate also spawned phone makers Vivo and Oneplus. The growth of Oppo, the world's fourth-largest manufacturer by sales, slowed due to a lawsuit with Nokia over patent rights in 2021, which forced it to leave the continent for several years.
But this year, Chinese smartphone makers say they are making new efforts to boost sales in Europe, seeing an opportunity to gain market share with new technologies such as foldable devices, advanced cameras, and super-fast chargers.
“We've seen Europe demonstrate a very open attitude to the adoption of both foldable and folding devices. It's really a game changer,” said Tony Ran, president of Honor's European office in Shenzhen, adding that the continent is the company's most important market outside of China.
In the second quarter, Honor overtook Samsung to become the number one seller of foldable smartphones in Western Europe, having been among the top five sellers in terms of overall European market share in the previous quarter.
Ran said that 60 percent of European buyers of such phones in the company's online store have switched from the “duopoly” of Samsung or Apple devices. The flagship Honor Magic V3 folding phone is offered at a premium price of about 2000 euros, which is comparable to the price of the iPhone 16 Pro Max with 1 TB of storage at 1979 euros.
Meanwhile, last month, Oppo announced that it will launch its flagship Find X8 series in Europe, marking the high-profile return of its premium brand.
Billy Zhang, president of overseas marketing, sales and services, said Oppo “intends” to invest in the European market in the long term. Despite the difficulties, he hopes that consumers will gradually get used to the Oppo brand. “The first step is always painful,” he said.
Xiaomi, which has long been the most popular phone maker on the continent after Apple and Samsung, also increased its share of the premium market to 4.3 percent in the third quarter of 2024, up from 2.7 percent in the same period last year, according to IDC.
In Eastern Europe, formerly low-budget competitors such as Transion, the Chinese manufacturer that dominates Africa, have also significantly increased their middle-class sales.
Analysts warn that Chinese manufacturers have struggled to raise their share of the European market above 4 percent in recent years, while paying huge sums for aggressive marketing campaigns that include sponsorship of major sporting events such as the Champions League or the French Open.
They added that the growth in Realme's market share was driven by sales in Russia after Samsung and Apple exited the market following Russia's full-scale invasion of Ukraine.
“In terms of Western Europe, they're...investing a lot of money in brand awareness...but not seeing a lot of positive return,” said Will Wong, an analyst at IDC.
Smartphone makers argue that the prestige of manufacturing in a developed market like Europe can help them in other high-end markets like Japan, Australia, and the United States, which could convince operators to sell Chinese phones in those regions.
