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China tech

China's Oppo taps KDDI and SoftBank for 5G push in Japan

Smartphone maker expands overseas as US ban stymies key rival Huawei

Oppo, China's second-biggest smartphone maker, is pushing into overseas markets as competition with Huawei heats up at home.   © Reuters

TAIPEI -- China's No. 2 smartphone maker Oppo will begin selling 5G smartphones in Japan through mobile carriers KDDI and SoftBank, an aggressive push for global growth that comes as U.S. sanctions leave its rival Huawei Technologies struggling overseas.

Oppo, the world's fifth-biggest smartphone maker by shipments, said on Tuesday that KDDI and SoftBank utilize all of their sales channels in Japan to sell at least two of its 5G models. The partnership with the country's second- and the third-largest carriers marks another key breakthrough for Oppo after it reached agreements with several leading European carriers -- including Orange, Vodafone and Deutsche Telekom -- for its 5G smartphone rollout earlier this year.

"2020 is the first year for Japan to enter the 5G era, and we are eyeing the opportunities brought by the speedy 5G network here with our lineup of 5G smartphones. ... These could give Oppo some edge to grow rapidly in the near term," Deng Yuchen, CEO of Oppo Japan, told the Nikkei Asian Review.

"However, the Japanese market is a highly competitive market and Oppo's goal here is not only to offer affordable prices with high-quality products but to also elevate our own brand value and product competitiveness to engage deeper relations with the Japanese operators," Deng said. "We wish to become a significant challenger in Japan."

The vast majority of smartphones in Japan are sold through mobile operators, bundled with service contracts, and premium devices -- those priced at over $750 -- dominate the market. Most smartphone makers see Japan as an extremely challenging market requiring a long-term commitment, high quality levels, and numerous technical approvals, according to market watchers. On the other hand, venturing into such a competitive market can help improve a smartphone maker's brand image and aid its expansion in other markets.

Japan's smartphone market has long been controlled by Apple, which accounted for 46% of the market in 2019, followed by Sharp, Samsung and Sony, IDC data showed. Oppo's 5G collaborations with two Japanese carriers comes as Apple prepares to release the first-ever 5G iPhone lineup later this year.

Oppo first entered the Japanese market in 2018 via online and retailer channels. Shipments grew more than 350% last year, but it still controlled less than 1% of the total market in Japan, according to IDC. For the January-March period, Oppo ranked No. 8 in the country, surpassing Huawei, the market data showed.

Oppo's push for a bigger share of the Japanese market comes as Huawei -- the world's second-largest smartphone maker -- has suffered setbacks in the global market. As part of Washington's clampdown on the company, Huawei has lost access to Google Mobile Services, which includes Google Play, Gmail, Google Map and YouTube, services that are essential for most smartphone users outside China. The U.S. clampdown has also hit global carriers' confidence in the marketability of Huawei's smartphones, market watchers said.

In May last year, several carriers -- including KDDI and Softbank, Chunghwa Telecom, Taiwan's largest operator, and Britain's biggest mobile carrier EE, which is owned by BT -- temporarily halted sales of Huawei handsets after the Chinese tech giant was added to Washington's trade blacklist. In response Huawei shifted its focus back home and began to aggressively expand its presence there. The company boasted a 41.4% share of the Chinese market in the first quarter of this year, compared with 33.9% a year earlier, while Oppo had just 17.2%, down from 19.1% a year ago, according to data by Counterpoint Research.

Joey Yen, an analyst with IDC, said Oppo has made several milestone expansions into overseas markets after Washington's ban began to hit Huawei. "Oppo has a nickname, mostly among female users, of 'little iPhone,' meaning it is a more affordable iPhone. But it's not like Xiaomi, which only targets super price-sensitive users," Yen said. "Oppo has long built its brand image with extraordinary cameras and battery tech, and it's likely to take over market share if Huawei is forced to give up some ground in some foreign markets due to the U.S. ban on its access to American technologies."

"However, whether the growing momentum is sustainable is still uncertain. After all, smartphones are still a mature and declining market," she added.

Oppo's alliance with the two Japanese operators, who together control 47% of the market, could also pave ways for the Chinese smartphone maker's engagement later with Japan's biggest carrier, Docomo, which boasts a 40% market share.

KDDI will start selling the Find X2 Pro -- Oppo's latest flagship 5G smartphone that launched in March -- on July 22, while Softbank will sell the midrange Reno 3 5G handset from July 30, according to the company. The Find X2 Pro is powered by Qualcomm's Snapdragon 865 5G mobile processors, which is also used in the latest Sony and Samsung flagship phones released in the first half of 2020. The Reno 3 5G, launched in 2019, is equipped with another of Qualcomm's mid-range 5G mobile chip platforms.

Other Oppo devices the two carriers will sell include smartwatches and wireless earbuds. The Chinese smartphone maker has also customized its earthquake alert app specifically for the Japanese market.

In addition to increasing its presence in the Japanese market, Oppo plans to tap into other new markets this year, such as Germany, Romania, Portugal, Belgium and Mexico, according to the company. The Chinese company became one of Europe's top five smartphone vendors in the first quarter, research agency Canalys said.

Oppo said his company's unit sales in central and eastern Europe increased as much as 757% on the year in the first quarter of this year, and grew more than 560% in Russia alone, while in Italy and in Spain, Oppo's shipments grew fifteenfold and tenfold from a year ago.

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