How China's Realme has bought 50 million telephones in simply over two years
Starting a new phone brand in 2018 may seem too late in an already crowded market, but Sky Li believed that consumers between the ages of 18 and 25 were largely underserved – they needed something that was both affordable and cool.
A few months after Li founded Realme in May this year, the smartphone company organized a product launch on a college campus in India, the second largest smartphone market in the world. It brought its own production crew, built a makeshift stage, and invited local rappers to pay tribute to the event.
"I was amazed. Nobody sat down and it felt like a carnival, a big disco party," said Chase Xu, Realme's 31-year-old marketing director, at the company's headquarters in Shenzhen.
“No foreign company had ever entered the campus. They didn't think it was possible. Why should a university let you hold a kick-off event there? “Xu, dressed in a minimalist, chic black jacket from a local brand, shared with enthusiasm and pride.
“Realme became widely known thanks to the event. People found it very interesting that it mixed with students. Not just one product was launched. It showed a youthful, extravagant demeanor. "
In nine quarters, Realme shipped 50 million handsets worldwide, with India being the largest market, even larger than China. The goal this year is to double last year's target to 50 million units, a target that, according to Xu, is "almost complete". According to a Q3 report by research firm Canalys, it is now the world's seventh largest smartphone brand, only lagging behind those that have been around for much longer – Samsung, Huawei, Xiaomi, Apple, Oppo and Vivo.
Realme didn't achieve any of this from the ground up. It's another smartphone brand rooted in the BBK Group, the mystical electronics empire that owns and supports some of the world's largest phone manufacturers, Vivo. Oppo, OnePlus and now Realme.
In 2018, the former Oppo vice president and head of overseas business Sky Li announced that he was stepping down from Oppo to create Realme as an independent brand, similar to OnePlus Realme, OnePlus and Oppo all belong to the same holding group today. This company, along with Vivo, operates under BBK, which began selling electronic dictionaries in southern China in 1998 and has since diversified its portfolio.
While Realme and OnePlus work independently, they get access to Oppo's supply chain, a model that allows them to have lighter assets and, consequently, lower costs.
“Realme has an advantage because we share a supply chain with Oppo. We are able to get very good resources from the end of the offer, to be one step ahead globally and to get what we should have, ”said Xu.
For example, the aspiring phone maker was one of the first to get Qualcomm's new Snapdragon 865 chips and put four cameras into a handset. However, priority is not always guaranteed because "there is definitely competition between us and our colleagues to fight for the first," Xu admitted. "Of course it also depends on each team's research and development progress."
The light asset strategy also means that Realme can offer competitive technologies at relatively low prices. In India, the 128GB 8GB RAM phone cost less than 1,000 yuan ($ 152) and the premium display was less than 1,500 yuan ($ 228).
Realme is not concerned about increasing the margin in the "growth phase," Xu said, and the company has been "profitable from the start". On the flip side, the phone maker is also launching a range of IoT devices like smart TVs and headphones, categories with higher markups.
The smartphone-plus-IoT strategy is certainly not unique, as the siblings of the BBK family as well as Xiaomi and Huawei share the same vision: Smartphones and smart devices from the same brand form a well-connected ecosystem that increases sales and data collection for each other.
Another way to cut costs is to avoid extravagant outdoor advertising, according to Xu. The company prefers more subtle word of mouth like working with influencers, hosting music festivals on campus, and promoting an online fan community. And the strategy seems to be clicking on the younger generation who enjoy interacting with the brand they like and are even part of their creative process.
The most enthusiastic users would sometimes send Xu a pencil sketch of what Realme's next product should look like. “You have very interesting and excellent ideas. This is a great generation, "said the executive.
Chinese brands are going global
Madhav Sheth, India's managing director of Realme, is loved by the country's young consumers alike. As a former sales partner of Realme, he impressed Realme founder Li, who, according to Xu, “understands the Indian market very well, although he does not speak fluent English”.
“Sheth is very charismatic and speaks well in public. He knows how to inspire people, ”said Xu highly of Sheth, who is an avid Twitter user and has around 280,000 followers since joining in spring 2018.
The job of the Indian boss becomes more difficult as India perceives the Chinese influence more and more. In June, the Indian government banned TikTok and dozens of other Chinese apps because of potential national security risks, not long after scrutinizing Chinese investments. Sentiment against China has also increased as border tension has increased recently.
Despite all the odds, Realme is growing robustly in India. In the third quarter, it grew by 4% compared to the previous quarter and currently ranks fourth in India with a market share of 10%, according to research company Counterpoint.
“At the start of the quarter, we saw some anti-Chinese consumer sentiment affecting sales of brands from China. However, those feelings have subsided as consumers weigh different parameters even during the purchase, ”the researcher wrote in the report.
“Of course we don't want to see the India-China conflict. It is a problem of international relations. Realme does not participate in politics, ”assured Xu. “There will always be extremist users. What we can do is expand our fan base, give them what they want, and leave the extremists alone. "
Realme plans to expand in Europe, Russia and its home market of China over the next year. None will be a trifle as these are coveted markets for all of the major phone manufacturers.
Part of Realme's effort to connect with what Gen-Z thinks is "cool" around the world is working with celebrity designers. Xu's eyes lit up and raised his hand as if he were holding a ball. He mirrored Naoto Fukasawa, the renowned Japanese industrial designer who developed the onion-inspired color and pattern of the Realme X model.
“The afternoon sunlight fell through the large windows. (Fukasawa) looked at me playfully, took an onion from under the table and told me that was his inspiration, ”Xu recalled. “He slowly turned the onion in the sun. I was amazed. The veins, the pink, gold color, the texture. It was so nice. You wouldn't think it was an onion. You think it was handicraft. "