Will Chinese low-cost smartphones in Vietnam lose market share?

Analysts believe that an agreement between Viettel, a mobile network operator, and Vsmart, a mobile phone manufacturer, could drive Chinese smartphones into a corner.

While the majority of Vietnamese businesses have suffered losses in the Covid-19 epidemic, Vsmart is flourishing.

Will Chinese low-cost smartphones in Vietnam lose market share?

Joy 3 -  a product of Vsmart



The Gioi Di Dong and CellphoneS, the leading mobile phone distribution chains, both reported that Vsmart is slightly outperforming Chinese rivals.

Of 10 best sellers among low-cost models, priced at below VND5 million, at The Gioi Di Dong, three belonged to Vsmart in the first two months of the year. At CellphoneS, Vsmart was also the No 1 in the low-cost market segment with 30 percent of market share.

Following the unexpected success with Vsmart Live late last year, the mobile phone brand of Vingroup has been pursuing a 'strong configuration' strategy. For the same price levels, Vsmart products have a much stronger configuration than Chinese products.

Following the unexpected success with Vsmart Live late last year, the mobile phone brand of Vingroup has been pursuing a strong configuration strategy. For the same price levels, Vsmart products have a much stronger configuration than Chinese products.

 


Vsmart’s Joy 3, for example, is equipped with Snapdragon 632 chip, while the models of Xiaomi, Realme and Oppo all use Snapdragon 4xx or Helio.

The ‘strong configuration + reasonable price’ strategy once helped Chinese smartphones succeed in Vietnam. However, the ‘weapon’ is now in the hands of the Vietnamese brand.

Vsmart is likely to take a stronger move in the low-cost market segment. And the move is said to have a connection with Viettel, the No 1 mobile network operator in Vietnam.

Viettel recently announced that it will sell smartphones at below VND1.5 million and feature phones at below VND400,000 in order to ‘universalize’ 4G in Vietnam.

There are two goals in Viettel’s strategy – obtaining 10 million more 4G users and increasing the profit from telecom services by 4.3 percent. Viettel only says it ‘will join forces with Vietnamese suppliers’, while it doesn’t mention any specific brand.

Analysts believe that Vsmart is the most suitable Vietnamese supplier for Viettel. After Mobiistar disappeared, Vietnam only has two local brands – BPhone and Vsmart.

Meanwhile, BPhone focuses on the mid- and high-end market segments and is believed not to have resources to compete with rivals in the market segment of products priced at below VND1.5 million.

In fact, Viettel and Vingroup have been ‘close friends’. In May 2019, the two groups announced close cooperation to build product ecosystems for the two parties. The announcement was made six months before Vingroup announced the transfer of its VinSmart (retail brand) and the dissolution of VinPro (home appliance distribution chain).

In the history of the telecom industry, the cooperation between mobile network operators and mobile phone manufacturers is commonly seen. When developing the first iPhone, one of the first things Steve Jobs had to do was seeking a mobile network operator. And it was Cingular, now belonging to AT&T.

Le Ha

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