Apple may have something to learn from secretive billionaire as he undercuts the iPhone in Chinese marketplace

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Date: Tuesday, March 21st, 2017, 05:21
Category: Apple, Finance, iPhone, News

Duan Yongping may have figured out how to beat Apple at its own game in the Chinese marketplace.

The reclusive billionaire founded both Opposition and Vivo, the twin smartphone brands that dealt the world’s largest company a stinging defeat in China last year. Once derided as cheap iPhone knockoffs, they leapfrogged the rankings and shoved Apple Inc. out of the top three in 2016 — when iPhone shipments fell in China for the first time.

Jongping stated that he was able to beat Apple in the region given that Apple didn’t adapt to local competition. Oppo and Vivo employed tactics Apple was reluctant to match, such as cheaper devices with high-end features, for fear of jeopardizing its winning formula elsewhere, Duan said.

“Apple couldn’t beat us in China because even they have flaws,” the 56-year-old electronics mogul said. “They’re maybe too stubborn sometimes. They made a lot of great things, like their operating system, but we surpass them in other areas.”

Duan has been a long-time investor in Apple as well as a fan of CEO Time Cook in the process.

That’s not to say Duan doesn’t appreciate the iPhone maker’s global clout. In fact, the billionaire’s obsession with his U.S. rival is legion: he’s long been a big-time investor in Apple and an unabashed fan of its chief executive officer.

“I’ve met Tim Cook on several occasions. He might not know me but we’ve chatted a little,” Duan said. “I like him a lot.”

Duan, who currently resides in Palo Alto, had the following to say about the company:

“Apple is an extraordinary company. It is a model for us to learn from,” Duan said. “We don’t have the concept of surpassing anyone, the focus instead is to improve ourselves.”

In 2005, the entrepreneur and his protege Tony Chen decided to create a new company. Dubbed Oppo, it sold music players but ramped up to smartphones in 2011. In 2009, BBK itself created Vivo, headed by another of Duan’s disciples, Shen Wei.

“Making mobile phones was not my call,” said Duan. “But I reckoned we could do well in this market.”

Initially, neither Oppo nor Vivo captured much attention or market share. The iPhone was intriguing users upon its initial launch while BlackBerry still held sway over the corporate market. Both Oppo and Vivo then developed a marketing-blitz approach that relied on local celebrity endorsement and a vast re-sellers’ store network across China. They crafted an affordable image that appealed to a millennial crowd, then tricked out their devices with high-end specs. On the surface, Oppo and Vivo phones now routinely surpass the iPhone on measures such as charging speeds, memory and battery life.

This paid off and in 2016, the two companies shipped more than 147 million smartphones in China in 2016, dwarfing Huawei Technologies Co.’s 76.6 million units, Apple’s 44.9 million and Xiaomi’s 41.5 million, IDC estimates. Oppo and Vivo both doubled their 2015 haul. In the fourth quarter, they were No. 1 and No. 3, respectively — Huawei was second.

The two companies are picking up ground beyond the Chinese marketplace. In the fourth quarter, Oppo and Vivo represent the number four and number five smartphone companies in the world, respectively. Roughly 25 percent of Oppo’s shipments head to India. Duan also owns a “small amount” of Alphabet Inc., whose Android operating software runs Oppo and Vivo devices as it does the majority of the world’s smartphones.

Over the weekend, Apple CEO Tim Cook offered the following comments regarding the Chinese marketplace:

“The competition is more fierce in China — not only in this industry, but in many industries,” Cook told the China Development Forum in Beijing. “I think that’s a credit to a number of local companies that put their energies into making good products.”

Still, one man and his two companies are pulling the rug out from Apple in the Chinese marketplace.

And maybe Apple could stand to learn from them.

Via Bloomberg

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