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Asian smartphone upstarts have giants jittery

The competitive landscape of the smartphone industry is changing so rapidly that the must-have brands of tomorrow may still be a gleam in their founders' eyes.

Oppo was determined to make a splash at Thailand Mobile Expo 2014 in Bangkok. The Chinese manufacturer's exhibition space, shown here on Oct. 4, rivaled those of the big global players.

     Perhaps the biggest tectonic shift is happening in Asia. The 2014 Nikkei Brand Survey, which asked people in six countries in the region to name the brand of smartphone they covet most, told us something we all know: Established Western and East Asian manufacturers reign supreme. U.S. tech powerhouse Apple ranked first, followed by Samsung Electronics of South Korea and then Sony of Japan.

     The surprises lie outside the top 10. It may be no exaggeration to say that to look at those names is to gaze into the future.

Oppo who?

The smartphone business has never been easier to enter thanks to the spread of supply chains that enable companies to procure components at low prices, assemble them efficiently and bring the finished products to market quickly. This new infrastructure is why so many newer names squeezed their way into the ranking. Perhaps the most notable rising star is Oppo Electronics, a Chinese manufacturer that slotted in at 11th.

    On Oct. 4, Bangkok's Queen Sirikit National Convention Center was packed with young people keen to check out the latest gadgets at Thailand Mobile Expo 2014. Oppo's exhibition space was an impressive site that rivaled that of Samsung in scale and design.

     Oppo is fast entering the big time in Asia. It was the third-hottest brand in the survey's rankings for Indonesia and Thailand, and it placed ninth in Vietnam. Since entering the Thai smartphone market in 2009, it has become one of the top five players. The Chinese brand is also grabbing increasingly large chunks of the markets in Indonesia, Vietnam and India.

     Chinese manufacturers tend to focus on cutting costs to the bone and using rock-bottom prices to win over broad swaths of the market. Not Oppo. "We're not after market share. We produce attractive items that bring profit," said Li Bingzhong, head of the company's overseas mobile phone business.

Oppo's new Find 7a smartphone has functions that give fans of the selfie something to smile about.

     At the Bangkok tech expo, Oppo's new Find 7a smartphone attracted a lot of interest. The handset is priced at 15,990 baht ($491) and features a high-definition liquid crystal display screen. It even has a function that comes in handy for people who like to take selfies.

     Pricewise, it falls somewhere between the upscale offerings from Apple and the "$100 smartphones" being cranked out by other Chinese makers. The balance Oppo strikes between price and function is one of the brand's biggest drawing points.

     Oppo is not trying to paint itself as a higher-end alternative to its Chinese rivals. In the still-developing market of Indonesia, for example, it is selling a model for smartphone newbies priced at a relatively modest $138.

     At a phone shop in Jakarta recently, 24-year-old Yulia was admiring Oppo's N1 mini smartphone. "The camera moves in every direction," she said. "It's good for taking selfies."

     The phone retails for 5 million rupiah ($412), roughly the starting salary for a person straight out of college. While that's hardly a price everyone can afford, it did not deter sales clerks from talking up the gadget and telling customers the phone was a good deal because they would have to fork out another 1 million rupiah for a Samsung or Sony phone with similar functions.

Calling on Leo

Oppo is steadily building up its brand power. It spent a fortune to recruit Hollywood star Leonardo DiCaprio to hawk its products on TV. In China, an ad featuring the actor had the nation abuzz. In it, an Oppo-wielding DiCaprio uses a Find-series handset's high-definition images and mapping software to track a mysterious beauty who provokes him with the message "Find me."

     For the tech event in Bangkok, the company brought in a popular Thai songstress and distributed free coupons for snacks. Oppo is well aware that along with smartphones, food is another hot seller in Southeast Asia, and its marketing strategy reflects this.

     As of the end of June, the company was doing business in 10 countries and regions in Asia. Part of its focus in the second half has been to fortify its operations in other emerging markets, such as the Middle East and Africa, said overseas business chief Li. Oppo also sells its products in the U.S. and Europe through and other online retailers. It aims to follow the path forged by tech Chinese pioneers Huawei Technologies and Lenovo group and become a major global player.

     CEO Tony Chen founded Oppo in 2004 in the city of Dongguan, an international electronics-manufacturing hub in the southern province of Guangdong. Before establishing Oppo, he built up experience working in the electronics industry. The company's first products to emerge on the global stage were portable music players and Blu-ray Disc players.

     Oppo is one of only a handful of Chinese tech companies that have been able to grow their brands beyond the country's borders. Most of the country's businesses that dream of going global are thwarted by rising payroll expenses and Europe's economic funk.

In India, too

Promising homegrown brands are emerging elsewhere in Asia, too. A 30-something homemaker in Mumbai recently replaced her Micromax Informatics smartphone with a higher-end model made by the same Indian company. She paid more than 10,000 rupees ($162) for the new handset. "I bought it because, in addition to making calls, I want to use the Internet more often," she said. "I'm satisfied with my new smartphone."

     In the South Asian country's burgeoning smartphone market, domestic players, including Micromax and Karbonn Mobiles, are rapidly gaining ground on the likes of Samsung, Apple and Sony. A survey by U.S. research company IDC shows that Micromax accounted for 18% of smartphone shipments in India in the April-June period of 2014, securing the second-largest share, while Karbonn came in third, with 8%. Samsung was No. 1, with a 29% share, but the two domestic makers are closing the gap fast.

This report was written by Nikkei deputy editors Ken Kuwahara in Tokyo; Toyoaki Fujiwara in Bangkok and staff writers Sadachika Watanabe in Jakarta; Takafumi Hotta in Mumbai.

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