South Korean tech was once considered low quality and cheap. Still Korean manufacturers managed to reach the masses, make an impact on global market and carve their way into the major league. You have probably heard of such brands like LG or maybe even Samsung? Today, history is about to repeat itself and while the home continent is still Asia, this time invasion comes from China. Chinese manufacturers struggled with legacy of making unbranded “white label” phones for telecom carriers and poor-quality copies of famous devices. Well, things are changing and not so slowly at all.
Enter the Dragon
By the end of the last year 10 out of 17 top smartphone makers were based in China. Global audience probably knows the best about Lenovo, which translated success they made with their laptops into smartphone market, acquiring former USA giant Motorola from Google for $2.9 billion and Huawei which started its journey as “white label” manufacturer but fought its way into the mainstream with number of pretty good devices, some of them from Ascend and Honor lineups. But who is Xiaomi? This Beijing based company was founded in 2010 and used massive home market of 1.35 billion people (Or in other words four USAs) to rise to prominence as world’s third largest manufacturer with well priced quality models, including latest flagship MI4. All of them have something in common. They use cheap labor and seek volume sales over profit. So far, so good. These manufacturers overtook low-range and mid-range segments with vary affordable devices and offer flagship quality in the mid-range price segment. Dragon Slayers are poorly absent and it seems that only Apple, which isn’t even competing in mid-range market, and Samsung, who manages to keep up the sales, are able to put the fight.
Problems along the Way
Even though Chinese companies are able to put out very competitive prices they are somehow still struggling to leave home market and launch full-scale global invasion. Xiaomi infamously halted their sales in another lucrative market, India, due to a patent dispute with former mobile phone maker Ericsson. End result will most probably be Xiaomi paying royalties. Considering recent embarrassing dispute between Microsoft and Samsung, we can see that large players are not above reaching understanding through court, so we can expect them to prey over intellectual properties on Chinese newcomers which are used to playing on home terrain, on their own rules.
Navigating Global Labyrinth
These problems will surely slow their breakthrough, but Asians are learning and they are learning fast. Tencent, Chinese internet giant, reached abroad audience under the guidance of seasoned Silicon Valley lawyer. Lenovo is spending large amounts of money while building mighty patent bank, which includes those of NEC and Motorola, to scare off potential lawsuits. Xiaomi’s management team, including some of former Google executives, is gearing up for forthcoming legal battles and Huawei’s vice president Shao Young says that company will continue to challenge Samsung and Apple globally in 2015, so China’s rise in smartphone market share from current 13% is far from over.
So, what else can we conclude than times where Chinese phones were disregarded as unreliable and low-quality are long gone and we will continue to see them even more. Learning how to navigate western legal waters, bringing true innovations on the table and polishing their products just a little bit more will help them to challenge big two even in flagship segment and become household names. So learn to pronounce “She-ow-me”, you will need it.