SMARTPHONES: Under Pressure, China Brands Skip Global Show

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Bottom line: The absence of most mid-sized Chinese smartphone brands from the world’s biggest telecoms show this week in Spain reflects their inability to mount serious global campaigns, and also growing financial pressures many are facing.

Mid-sized Chinese brands skip MWC
Mid-sized Chinese brands skip MWC

China’s crowded field of low-cost and mid-range smartphone brands may claim to have global aspirations, but you would never know that judging by their loud absence at the world’s biggest telecoms show this week in Spain. I’ll admit that I’m not personally attending this year’s Mobile World Congress in Barcelona, so I’m dependent on the show’s website and media reports to determine who is and who isn’t attending.

But based on my own findings, including talks with spokesmen from at least one of the big domestic brands, most companies are skipping this show that has emerged in recent years as a major venue for debuting new smartphones. There are several reasons for skipping the show, but I suspect that chief among those is costs.

Most of the players from China’s crowded field of homegrown smartphone brands are losing big money due to stiff competition as they fight for share in their home market. While most have made some efforts to sell their phones abroad, most notably in developing markets like India and Brazil, few probably have the budgets to send a serious team to Spain to pursue sales from a European-centric group of buyers.

All that said, this year’s show does include participation from the usual suspects, namely the surging Huawei and crosstown rival ZTE (HKEx: 763; Shenzhen: 00063), along with the struggling Lenovo (HKEx: 992). Huawei and ZTE have attended MWC for years due to the shows origins as a prime venue for showing off equipment from their older networking equipment business. Lenovo has joined more recently as it tries to diversify beyond its older PC business into smartphones, though with disappointing results. (previous post)

But after those 3 well-funded stalwarts, the list of Chinese smartphone brands attending this year’s Mobile World Congress is remarkably thin. One media report said Xiaomi, a former high-flyer that sputtered last year, will debut its latest Mi 5 model at the show. (English article) But Xiaomi’s name is absent from the list of exhibitors, and I suspect this so-called “debut” will just be an informal event in a hotel room or restaurant by some company officials visiting the show.

Among the other mid-sized domestic brands vying for share in China’s market, the only 2 listed as official exhibitors at this year’s show are Oppo and TCL (Shenzhen: 000100). Oppo surprised many by ending last year as China’s fourth best-selling smartphone brand, while TCL is closely tied with France’s Alcatel, and thus is probably attending the show for relatively low cost as part of the Alcatel delegation.

Others Absent

Everyone else was absent from the list, including Vivo, which also surprised some with its finish as China’s fifth best selling brand at the end of last year. Others notable for their absence included older brands Meizu and Coolpad (HKEx: 2369), the former backed by Alibaba (NYSE: BABA) and the latter a former industry leader. LeEco (Shenzhen: 300104), formerly known as LeTV, and Qihoo (NYSE: QIHU) were also both absent, even though both have lots of cash and are making big pushes into smartphones.

A contact at Meizu told me his company decided to skip the show this year, after sending a small delegation in 2015, because they simply didn’t have time. The reality is that the show is better known as a display ground for networking equipment than consumer products like smartphones, so it’s quite possible many brands skipped it for that reason.

At the end of the day, some might argue the absence of most of China’s emerging smartphone brands is simply due to budgets, since attending such a show is quite an expensive proposition. But their glaring absence also underscores the fact that many really lack the sophistication and resources to mount serious global campaigns, and that most will be largely confined to a home China market and could ultimately fold in the next couple of years due to cut-throat competition there.

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