Original Equipment Manufacturers (OEMs) – A Great Power for China Smartphone Industry Development

4 comments Thursday, November 26, 2015

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The integrators in the cell phone industry, are always considered as mobile phone original equipment manufacturers (OEMs), who define a mobile phone and design the phone’s outer appearance and inner structure, after that, mould and test the hardware with software, and then buy housing materials, battery, screen, buttons and other parts and assemble these mobile phone parts into a complete handset.

After China has been the biggest manufacturing base of global mobile phone, Chinese OEMs has always been a great power for China smaratphone industry development.

At first, large companies like Foxconn who could make 100 millions of cell phones, are OEMs for famous international and high-end mobile phone brands, Apple for example; small but noname OEMs were manufacturing phones for “white box” brand, a grey brand or most well known saying, Shanzhai brand. This might be a very important time for Chinese smartphone industry, due to the thousands of these small OEMs, Chinese mobile phone spreads and sells all over the world. Of course, the Taiwan-based chipset manufacturer – MediaTek, contributes a lot for the popularity of Chinese smartphone.

However, it is much easier to expand the business scales and sells more phones with the brand reputation. So, developed into nowadays, more and more Chinese OEMs, especially the most shanzhai brands in Huaqiangbei, start to make use of local resources and build their own smart phone brand. Later, the internet smart phone brand – Xiaomi, appears and speeds up the transition, and eliminates many small OEMs from China mobile phone market. But there are still hundreds of smart phone OEMs that can be categorized into three loose buckets.

At the top, are the major international brands: Huawei, Lenovo, ZTE and increasingly less familiar names like Coolpad, G5 and Gionee. These companies have established strong-ish brands and wide distribution networks. They tend to do a lot their own sales, and have ties to the major wireless operators. Below that is another tier of branded vendors. These are companies that make low-cost handsets, but are trying to establish their own brands. Typically, they enjoy sales in one region in China and sales to a few other countries where they have relationships with smaller carriers or ‘local kings’ that control some other distribution channel. Below that, there is another tier that likely numbers in the hundreds if not thousands of very small vendors who exist on the margins of profitability. These companies sell largely to a domestic audience or to the very bottom of the emerging markets consumers. These companies care less about quality, brand and distribution. It is important to remember that each of these camps looks at the market very differently. In general, the top tier worry about competing with Apple and Samsung (especially). The middle group worries about being consumed from below, while the bottom group worries mostly about surviving.

All in all, Chinese smart phone OEMs have helped a lot for globe’s smart phone development and have manufactured over 80 percent of smart phones that sells all over the world.

China , OEMs , manufacturers , smartphone


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