Six Ways Chinese Electronics Brands can Move Up the Value Chain

September 2022

Xiaomi, TCL and Oppo are aggressively expanding into overseas markets and enjoy tremendous success. However, these brands tend to be popular with consumers due to their low prices. What can Chinese brands do to shed the negative perception of low quality and a cheap brand image.

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Key findings

A booming economy is fuelling the rise of domestic brands

Middle-class households and easy access to credit are fuelling demand for consumer electronics products and domestic brands.

Local brands are viewed as a lesser brand compared to Apple, even in China

The domestic market is highly competitive as the entry barrier is low and as more brands jostle for market share. Even Chinese consumers still hold Apple in high esteem and buy Apple if they can afford it.

Chinese brands are competing on price

The rapid growth of Chinese brands is mainly due to their low prices. Chinese brands are still struggling to break into developed markets.

There is still a negative perception of Chinese brands

A fear of being spied on by the Chinese government and a lack of awareness of Chinese brands are hindering their overseas expansion, especially in developed markets.

Investing in technology and a pivot to a premium positioning can elevate Chinese brands

As Chinese brands are investing in technology, they need to position themselves to be on a par with Apple and Samsung.

 

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Key findings
Scope
Strong domestic markets provide a strong base for Chinese companies to expand overseas
Easy access to credit is fuelling the middle class’s spending
Rural households provide additional boost in demand
Competitive domestic market forces Chinese companies to expand overseas
Even Chinese consumers view Apple as an aspirational brand
The lucrative US market remains forbidden fruit for most Chinese brands
Chinese companies struggle to break into developed markets
Fear that users’ data is not safe with Chinese brands
Chinese brands are still seen as technologically inferior
Strategies adopted by Chinese brands in overseas markets
Affordability – Flooding the market with value for money products
Relentless R&D – Developing own core competencies as a competitive advantage
Co-branding – Buying credibility with international brands
Sponsorship – Using sports to gain brand recognition in overseas markets
How successful are these strategies?
How Chinese brands can elevate their brand image
Focus on profit margins, not growth
Compete on useable technology, not bragging rights
It takes time to build a brand
Post-purchase experience as important as low prices
Multi-brand strategy via acquisition
Design can help build a brand

Consumer Electronics

Consumer Electronics refers to the sales of Computers and Peripherals, In-Home Consumer Electronics, In-Car Entertainment and Portable Consumer Electronics to the end consumer.

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