TELECOMS: Xiaomi, Other Upstarts Skip Barcelona Telecoms Fest
Bottom line: The absence of Xiaomi and other newer Chinese smartphone makers from the world’s leading telecoms show reflects their focus on emerging markets and limited promotional budgets due to stiff competition at home.
I’m in Barcelona this week for what has become the world’s biggest annual telecoms show, and thought I’d kick off my coverage with a look at who is attending from China this year. The list contains most of the big names you’d expect, including Huawei, ZTE (HKEx: 763; Shenzhen: 000063) and Lenovo (HKEx: 992), though Lenovo has decided to keep its name off the “made in China” list and is opting to call itself a US company.
But equally noteworthy is who isn’t on the list, at least not as an exhibitor. That list of absentees includes all of China’s newer smartphone makers, led by the fast-rising Xiaomi that has come from nowhere over the last 3 years to become the world’s third biggest brand. Others that aren’t on the list include locally well-known Chinese names Coolpad (HKEx: 2369) and Meizu, which have recently formed tie-ups with major Internet companies Qihoo 360 (NYSE: QIHU) and Alibaba (NYSE: BABA, respectively.
So, why have these newer players decided to skip Barcelona, even though all have embarked on recent export drives as they seek relief from their fiercely competitive home market? It’s not completely correct to say they’re skipping Barcelona, as many of these companies are sending representatives to the show to network and probably hold some meetings with potential clients outside the show.
Meizu has told me it’s sending a top global sales representatives to the event; and Xioami confirmed that its high-profile global sales chief Hugo Barra, poached a couple of years ago from Google (Nasdaq: GOOG), is also attending. Many of these smaller companies are probably aiming to skip the high price tag to officially showcase their wares at Mobile World Congress (MWC), and instead are hoping to meet in hotel rooms and other off-site venues with prospective clients who will be attending.
But there’s an even more fundamental reason why these newer, mostly second-tier names aren’t splashing out big bucks to show off their wares at MWC. Put simply, all of these companies are targeting developing markets in places like Southeast Asia, India and South America for their global expansion. By comparison, Barcelona is really a show for westerners, especially Europe that was traditionally home to some of the world’s leading telecoms brands.
While Huawei, ZTE and Lenovo have all made moves to enter these lucrative but extremely competitive western markets, none of the newer players has dared to make such a move just yet. The one slight exception is Xiaomi, which last month announced it will enter the US with several wearable devices outside of its core smartphone business.
At the end of the day, everyone has limited marketing dollars to spend, and these newer, second-tier players are probably cutting costs wherever they can just to survive the brutal price wars now occurring in China. Both Huawei and ZTE are extremely logical choices to attend, as each is strongly represented on the consumer products side, and also on the networking equipment side. Both companies were among the event’s major sponsors, their names appearing alongside the likes of Sweden’s Ericsson (Stockholm: ERICb), software titan Microsoft (Nasdsaq: MSFT) and chip giant Intel (Nasdaq: INTC).
Lenovo’s attendance doesn’t come as a huge surprise either, since the company is making a serious push into the US and other western markets through its recent purchase of Motorola and signing of a sponsorship deal with movie star Ashton Kutcher. Huawei and ZTE have done similar tie-ups with big names as they also eye those markets. But for now at least, names like Xiaomi, Meizu and Coolpad are showing their insecurities by taking a pass on Barcelona. That’s probably a wise move, since none of these names, with the possible exception of Xiaomi, would probably get very far in these tough western markets at their current stage of development.
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