Corporate China
PUBLISHED : Monday, 05 May, 2014, 11:51am
UPDATED : Monday, 05 May, 2014, 7:02pm

Weibo: Vivo chases Xiaomi, Autohome, Qihoo execs at play

BIO

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young’s China Business Blog (www.youngchinabiz.com), commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.”
 

It's been a quiet week in the microblogging realm, due to the three-day May Day holiday that saw much of China closed down for the latter part of the week to enjoy the arrival of spring. The vacation didn't see any slowdown in the ongoing smartphone price wars in China, which are forcing local players to look overseas to escape the overheated domestic market. Mid-sized player Vivo became the latest player to look outside China, starting down a path that looks similar to that being blazed by smartphone sensation Xiaomi.

Meantime, top executives from car website Autohome (NYSE: ATHM) and software security maker Qihoo 360 (NYSE: QIHU) were having a bit more fun on their holidays. The vacation saw Autohome founder Li Xiang, and Qihoo's controversial CEO Zhou Hongyi both take a break from their usual business thoughts to make some entertaining posts on their microblogs, showing how they like to spend their non-working time.

Let's start off with the business side of things, as China gets back to work after the long Labor Day holiday. China's smartphone price wars have been in the news almost non-stop for much of the last half year, as domestic producers flooded the market with cheap new models. The situation is rapidly worsening as the market becomes saturated, and domestic smartphone sales actually plunged about 15 percent in the first quarter of this year

In a bid to escape some of that pressure, a growing number of Chinese players are looking abroad where competition is less intense. Two of the largest, ZTE (0763.HK; Shenzhen: 000063) and Huawei, have embarked on global campaigns, though both are more focused on developed western markets. The smaller but fast-rising Xiaomi has taken a different approach, announcing last month it will move into ten developing markets this year as it kicks off a global expansion.  

Now Vivo, whose parent is BBK Communication Technology, has announced its own expansion that looks quite similar to Xiaomi's, targeting the Southeast Asian markets of Malaysia, Thailand and Myanmar. Vivo marketing executive Feng Lei was detailing the expansion on his microblog, saying that 2014 will mark the official beginning of his company's globalization.  

He makes different posts on all three of the markets that Vivo is entering, discussing its partners and various preparations. Compared with Xiaomi's similar announcement last month, Vivo's move looks far more low key. But that's probably because Vivo doesn't have the same marketing skills as Xiaomi, which has become a master at attracting media attention for almost everything it does.

From a purely strategic perspective, this choice of developing markets looks like a smart one for a smaller player like Vivo with limited resources. But that said, the company will have to compete with Xiaomi in many of these markets, which could already have limited potential due to lower living standards and underdeveloped infrastructure. At the end of the day, I doubt Vivo will get much relief through this first move outside China, and its overall smartphone sales are likely to stall or start falling this year.

From Vivo, let's look at Qihoo's Zhou Hongyi and Autohome's Li Xiang. I don't usually follow Zhou's posts, most of which are promotional or rants against his many enemies. But his latest post over the holiday revealed a more personal side to Zhou, who shared his passion for paintball. The popular game in the west sees "armies" of friends try to "hunt" and "kill" rivals using toy guns armed with fake paint-filled bullets. It was nice to see this more playful side of Zhou, though I wasn't surprised that he enjoys this kind of aggressive hobby.

Li Xiang's post was similarly fun, though in a more playful way that reflects his childhood growing up in a village in Hebei province. Li occasionally posts stories about his childhood memories, and this week celebrated China's May 4 Youth Day by reminiscing about mischief that he and his friends made with firecrackers during past Chinese New Years. In one particularly graphic and colorful account, Li recalled how he and his friends threw a large, lit firecracker into a manure-filled pigs nest in their village. Unfortunately, Li and his friends couldn't run away in time to avoid the explosion, and you can guess the rest.

To read more commentaries from Doug Young, visit youngchinabiz.com

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