That is why the big attack by Chinese smartphones failed

It wasn’t that long ago: two or three years ago, Chinese smartphones were on the right track. Huawei briefly dethroned Samsung despite US sanctions, and Xiaomi mobile phones outsold Apple’s iPhone. This is not in China, but in Europe.

Euphoric about the success, Xiaomi founder Lei Jun announced in the autumn of 2021 that he wanted to surpass market leader Samsung in the next three years. At the same time, Oppo and its subsidiary Oneplus were the third major Chinese manufacturer to enter Europe.

But now the wind has changed.

The Oppo branch in Switzerland, which was founded four years ago, “immediately ceased operations for economic reasons” in October, according to a short press release. About a dozen employees will lose their jobs.

Oppo’s emergency landing in Switzerland is typical of all Chinese brands; they can no longer leave our place. Huawei and Xiaomi are also miles away from surpassing Apple and Samsung in Europe. On the contrary. Your imagination has come to an abrupt halt. They are stagnating or losing market share again.

There are several reasons for this.

Instead of the hoped-for market leadership, the Chinese mobile phone brands are making smaller sandwiches in Europe – and in Switzerland. Huawei’s decline over the past three years is easily explained: the 2019 US sanctions have broken the Chinese’s neck here. Without Google apps and modern chips, once-popular mobile phones suddenly became virtually unsellable. Huawei was previously on the rise even in Apple’s country Switzerland, with some cheap and some technically superior devices. For the other Chinese brands, the reasons for the lack of success in Europe are more complex.

Expensive Chinese mobile phones are slow sellers

Oppo and Xiaomi in particular seemed to come from behind for a short time with good smartphones at competitive prices. However, in recent years their price advantage has visibly shrunk: supply chain problems in times of pandemic and war, increasingly complex hardware and longer update guarantees to keep up with Apple and Samsung are just a few price drivers.

In addition, the smartphone market is saturated, customers are retaining technically advanced devices for longer and almost all manufacturers are trying to compensate for shrinking delivery volumes with higher prices. Although this works great for Apple, Chinese manufacturers lose their price advantage and therefore their unique selling point.

Because devices from Apple and Samsung often cost only slightly more than Chinese mobile phones, which are now also expensive, most customers opt for the better-known brands. All the more so because China is mentioned in the same breath as poor working conditions, human rights violations and espionage. The fact that Apple, Samsung and Fairphone also produce in China is seen as a lesser evil.

It’s an open secret that Apple dominates the lucrative premium market. Chinese manufacturers, on the other hand, are hardly able to bring their most expensive models to customers in Europe on a large scale. However, this would be a prerequisite for sustainable success, as you can hardly make any money with budget devices alone or only with very high sales volumes.

In other words, even though Apple is making more money from rising iPhone and subscription prices (iCloud, Apple Music, etc.) despite cell phone sales that have been stagnant for years, this “trick” is not working for the Chinese manufacturers.

Self-made problems

Xiaomi and Co. can do little to change the difficult market environment, Xi Jinping’s authoritarian policies and the resulting ever-increasing anti-China sentiment; other problems are self-made. Although the hardware is often convincing, the software and the sometimes weak update support sometimes cause frustration.

Apple, and now Samsung and Google, have realized that sustainable success comes from good support. Those who can easily get their cell phone repaired in an emergency and receive updates for years to come are much more likely to remain loyal to the brand.

Chinese mobile phones could only survive against the might of the established brands if they were significantly better. But they aren’t. At Oppo, a patent dispute with Nokia made matters worse, leading to the company’s withdrawal from the German and French markets.

Despite the setbacks, Chinese mobile phones will not disappear from us anytime soon. You can also make good money in third, fourth and fifth place.