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Chinese Sub Brands Set To Be Consolidated

January 14, 2016 - Written By David Steele

There are many Chinese manufacturers building good quality devices so as to compete with the likes of HTC Samsung as well as Xiaomi and Huawei. However, one of the stumbling blocks for any manufacturer new to either a particular product or a region is how to build customer awareness. One of the trends that some Chinese manufacturers have tried is creating sub brands, such as Huawei’s Honor and ZTE’s Nubia. There are a few reasons why a given manufacturer may decide to create and maintain another brand of products, such as how easy the new sub brand is to pronounce for the particular home market. “Honor” is a much easier word to pronounce than “Huawei” (“wah-hee”). Other reasons include creating a new brand with the intention to tackle a different subsector of handsets: ZTE’s Nubia brand is for a more upmarket device compared with products wearing the ZTE logo. However, there are signs that introducing a number of sub brands into various markets has not helped the manufacturers and has perhaps hindered them. A new report from Digitimes, which cites unnamed industry sources, is suggesting that for 2016, manufacturers are looking to consolidate their smartphone ranges.

These sub brands include K-Touch’s Nibiru, INUI from Gionee, ZUK from Lenovo, Great God and ivvi from Coolpad and Palm from TCL. The cited example is Nubia, where sales figures have been disappointing. For every Nubia branded smartphone, ZTE sold four devices and because of this, the parent ZTE has sold off one third of Nubia to Chinese retailer, Suning, for a little under $300 million. Coolpad now has three brands to tackle the telecommunications, retail and online markets, but this has not worked out well for the company. It has new investors such as LeTV and Qihoo 360, and there are rumors that the business may be effectively bought by LeTV. We have already seen how the Great God brand has been passed across to Qiku (part of Qihoo 360). Lenovo’s ZUK, created via a joint ventre with Chinese Internet search giant, Baidu, has yet to achieve a breakthrough into the smartphone market.

The last two sub brands that could be consolidated are OnePlus, part of Oppo, and Palm, owned by TCL. OnePlus’ sales have been disappointing into overseas markets and the business is rumored to be laying off staff and could being incorporated back into Oppo. Palm, the brand applied to one of the first personal digital assistant devices, has been passed from owner to owner and split off from their last operating system, Web OS. TCL, which also owns the Alcatel brand, has yet to release any Palm-branded hardware, which could illustrate how difficult it is to launch a new brand into a crowded market. We may yet see a Palm-branded device in 2016, but we should not hold our breath.