Can OnePlus finally change the perception that Chinese smartphones are cheap and shoddy?
- An exclusive distribution pact with US carrier T-Mobile enables OnePlus to compete directly against Apple and Samsung in the premium smartphone segment of the world’s largest economy
OnePlus, the first Chinese smartphone company to sell its premium model through a major US telecommunications carrier, hopes to finally smash people’s general perception that China’s domestic brands are only good for inexpensive, low-quality handsets.
“Selling the OnePlus 6T through a US carrier is of great significance because it will help build confidence in Chinese brands, which is something that we should feel proud of,” Pete Lau, the founder and chief executive of OnePlus, said at a company event in Shenzhen on Monday.
OnePlus and T-Mobile jointly announced last month an exclusive pact that has made available the Chinese firm’s flagship OnePlus 6T model across more than 5,600 stores of the third-largest mobile network operator in the US.
Lau said that deal marked the first time a Chinese smartphone company has entered the US market’s premium segment for devices that cost between US$550 and US$630, which enables OnePlus to compete directly against Apple and Samsung Electronics.
“Some Chinese brands are already selling through US carriers, but those consumers (who buy from the US operators) only want to purchase a US$100 product, rather than look for a specific brand,” he said.
For the longest time, US mobile network operators relied on Chinese smartphone suppliers to deliver cheap handsets, stamped with the carriers’ own brands, that are meant for their low-cost subscribers.
Although more branded smartphones from Chinese brands have seen wide distribution in the US in recent years, these have mainly targeted the lower end of the market. These include Motorola from Lenovo Group, Alcatel from TCL Corp and handsets made by ZTE Corp.
The successful entry of OnePlus in the US market, which Lau described as having the most stringent certification process, shows not only a healthy awareness for the five-year-old Chinese brand in that market, but also a morale-boosting development for the rest of China’s smartphone industry.
“OnePlus has traditionally targeted a niche segment of enthusiasts, and T-Mobile is still overshadowed by giants like AT&T and Verizon in the US, so this move [in America] won’t pull masses of Apple and Samsung loyalists [to switch],” said Bryan Ma, vice-president of client devices research at IDC. “But it is a start in getting much more awareness in the US than OnePlus had before and in turn, fight the perception there about poorly-made Chinese smartphones.”
In January, US carrier AT&T walked away from its US smartphone distribution deal with Huawei Technologies over apparent national security concerns. Later it was reported that Verizon Communications also abandoned plans to distribute Huawei’s smartphones in the US.
That scuttled the plans of Huawei, China’s largest smartphone brand, to become a major player in the US market, where more than 90 per cent of handsets are sold through carriers. Huawei recently said its latest flagship Mate 20 smartphone will not be distributed in the US, while other Chinese brands compete against it in other markets across Asia and Europe.
Unlike rival Huawei and other Chinese brands, there has been demand from consumers in the US for OnePlus smartphones. Lau said in an interview with the South China Morning Post in May that the company’s e-commerce shipment records show that US buyers have come largely from three technology companies – Amazon.com, Facebook and Google.
“We’ve seen real demand for OnePlus smartphones at T-Mobile,” John Legere, the carrier’s chief executive, said in a statement last month to announce the exclusive distribution deal with OnePlus. He said nearly 200,000 subscribers registered their OnePlus smartphones to T-Mobile before the carrier started selling these devices.
Founded in 2013, OnePlus is a rarity among Chinese smartphone brands because it derives almost 70 per cent of its sales from outside the mainland, with the US, Europe and India among its biggest markets.
Lau had worked as a vice-president at Chinese smartphone brand Oppo before he established OnePlus in late 2013. Oppo remains a major stakeholder in OnePlus.
Before its T-Mobile distribution deal, OnePlus became the No 1 smartphone vendor in the US$400 to US$600 range open market – sold without bundled telecommunication carrier contracts – with 44 per cent of the market share, followed by Motorola at 16.7 per cent and Apple at 10.9 per cent, according to IDC research figures provided by OnePlus.
OnePlus, however, still has a lot of work ahead to become a major smartphone supplier by volume like Huawei, Xiaomi, Oppo and Vivo. In the latest quarterly ranking of global smartphone shipments, which was led by Samsung, Huawei and Apple, OnePlus did not even crack the top 10, according to data from Counterpoint Research.