Market Insight

OPPO Sub-brand Realme launches in China’s concentrated market

May 28, 2019

Zaker Li Zaker Li Senior Analyst, Smartphone & Mobile
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OPPO Sub-brand Realme launches in China’s concentrated market

Zaker Li, Senior analyst of TMT Demand

On 15th May, a new player officially entered into the China market: Realme. The Sub-brand of OPPO launched in India’s online market last year to fight Xiaomi’s Redmi brand. Now, the brand will also target the online market.

Realme X is the first series, including two devices, to launch in China, targeting the middle-range and low-end ($151-$250) price segments online. Realme follows the established strategy for online brands: focus on high specifications at aggressive prices.

In the case of the Realme X, the specifications include fingerprint sensor on display (FoD), pop-up front camera and 48mpx primary camera yet the price for the highest spec model is only 1799 RMB ($261) for a version with 8GB RAM & 128GB ROM.

As a new brand launched just last year, Realme is planning to ship 20m smartphones this year. China will be a key market for the company to reach such aggressive targets this year. Besides shipment growth, Realme’s launch in China has importance for OPPO on a strategic level.

A multi-brand strategy for OPPO to refine its market competition

Multi-brand strategies have been widely adopted by Chinese OEMs: Huawei has the Huawei and Honor brands (stared from 2013); Transsion holdings has Tecno, Itel and Infinix; Xiaomi launched the POCO Phone brand in 2018 and just split Redmi as another sub-brand from Xiaomi in January this year.

Prior to Realme, OPPO successfully created a more independent sub-brand, OnePlus, in 2014. OnePlus is successful in the middle-range and high-end ($401-$600) segments. OnePlus shipped 5.3 million units of smartphone in 2018. According to IHS Markit’s Smartphone Model Market Tacker, Realme shipped around 5m smartphones in 2018, with most of those shipments coming from India in the low-end and middle/low-end ($90 - $250) price segment. In China, Realme starts form the low-end to low mid-range ($151 - $250) price segment, which is the biggest price segment with 36% market share in China. IHS Markit thinks that focusing on this price segment is a smart choice for Realme, because the consumer in this price segment is less likely to have high brand loyalty, so it’s easy for a new brand to gain market share in a market like China.

Broadening OPPO’s brand appeal in China

China is a saturated with six consecutive quarters of year-over-year negative growth. The market is highly concentrated on the top 5 brands. Those brand account for almost 90% of the market in China market in Q4 2018 - there is not much space for small smartphone players. Brands like Goinee, Smartisan, Meitu, among others have disappeared.

Smartphone OEMs are starting to use sub-brands like other industries have handled multi-brand groups. In the automotive sector, hotels or home furnishings, corporate groups combine multiple brands under one umbrella. Especially in China, replicating this strategy lets smartphone makers present multiple, in-house, options to buyers to prevent them from choosing a competitors’ products instead. Keeping brand diversity is one of the most important reasons for the major brands to launch sub-brands.

Strengthen OPPO at home

OPPO is one of the major brands in China which has significant offline distribution channels. However, the company’s online market share is much smaller than Xiaomi’s and Honor’s. Both brands started their businesses online and focused on this retail channel more than on offline sales. Now Realme is joining this market to compete directly with Honor and especially Xiaomi.

Realme X key features as below:

  • Snapdragon 710
  • SONY IMX519 camera sensor
  • 6.3 Inch TFT-LCD FHD+ display
  • 48MP primary camera
  • POP-UP camera
  • VOOC quick charge 3.0
  • 4/6/8GB RAM +64/128GB ROM
  • Price at 1199 RMB to 1799 RMB ($174 - $261)

Geography
China Global
Organization
Xiaomi
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