Oppo, Vivo, Realme, OnePlus, and Iqoo are all subsidiaries of Dongguan-based BBK Electronics. But, to the world, BBK is nearly an unknown name. So what actually BBK Electronics is? How they came into existence? And why so many subsidiaries? Read the full article to know about BBK Electronics – The uncrowned king of Smartphone Market.
How BBK Electronics came into existence?
The journey started in 1995, when the general manager of Zhongshan Yihua group, a company that manufactured Subor (“Xiaobawang”), a budget gaming console meant as an alternative to Nintendo’s NES, in the early 1990s founded BBK Electronics with the intention to capture the Ed-tech Market. The person behind BBK Electronics is Duan Yongping, better known as Warren Buffet of China. He is well known is china for his smart investments and futuristic vision, currently one of the richest Chinese with net worth of $1.2 billion. He is a reculsive businessman and keep himself away from limelight, yet he’s an active and approachable blogger on stock forum Xueqiu.com.
Transformation of a Ed-tech brand to Biggest Smartphone Maker.
At the beginning, BBK focused on the Ed-tech industry and produced Educational devices, audiovisual equipment, and communication gadgets. The firm manufactured e-dictionaries, corded telephones, VCD players, and MP3 players. Thanks to an extensive offline sales network that utilized catchy and memorable advertising slogans, BBK gained a solid footing in the domestic electronics market.
In 1999 company’s most beneficial market i.e. the audio-visual market was taken over by the foreign giants like Sony and LG, the company was forced to file bankruptcy. As we say, “Those who learn from failures, become successful”, the same happened and BBK’s founder and CEO Duan decided to divide BBK into 3 separate businesses, namely: Audiovisual Electronics, Education Electronics, and Communications Electronics. Many experts believe that, the move of dividing BBK into 3 seperate business was the masterstroke by Duan to save the taxes and gain more government subsidy.
The audio-visual division led to the creation of OPPO in 2004, that initially focused on the production of DVD, MP3, and MP4 players. Duan himself takes the charge of Education electronics divison and was kept under BBK Electronics with the name BBK Educational Electronics (EEBBK). And the Communication Electronics division led to the creation of VIVO in 2009.
Rise of BBK
The decision of dividing the business into three separate portfolios turned out to be a bang. In 2004 BBK launched their first ever sub brand OPPO, headed by former BBK executive and another of Duan’s protégés, Tony Chen. They won’t stop with OPPO and launched another subsidiary VIVO in 2009, which was headed by BBK veteran executive Shen Wei. Vivo was formed on the basis of BBK’s communications division, and targeted the smartphone market. BBK soon achieved enormous growth and became the largest smartphone manufacturer in the world.
Does BBK really own VIVO and OPPO?
As Oppo and Vivo developed as spinoff private companies, BBK’s stakes and management participation in these companies remains closely guarded private information. Although OPPO and VIVO kept bashing the talks of their association with BBK and kept denying the claims of them being subsidiaries of BBK. But, if we look up at the stacks of OPPO, VIVO and BBK Electronics, we can see that Oppo is currently owned and controlled by Guangdong OPlus Communication Technology, which is a wholly owned subsidiary of Guangdong OPlus Holdings. The same holding company also has a stake of 45% in a company called BBK Education Development. Meanwhile, BBK Education Development counts Vivo (45%) and BBK Education Technology (10%) as its investors, per data provided by Chinese corporate data tracker Tianyancha. We can conclude that, BBK is the holding and OPlus is its another subsidiary which controls all the other subsidiaries under BBK.
The rise of Sub-brands
As stated above, Duan had divided company into three portfolios under which VIVO was given the charge of Communication Electronics divison. But, the enormous growth of smartphone industry forced Duan to unify the portfolios of Communication Electronics and Audio-Visual Electronics into a single portfolio named Consumer Electronics, driven by two subsidiaries OPPO, heading from audio and Blu Ray products to Smartphones and VIVO, which was Smartphone oriented brand only.
In 2008, the Chinese phone market was dominated by foreign brands like Nokia, Motorola, and Samsung. Oppo debuted its Smile Phone in the same year, marking the BBK’s entry into the ever increasing Smartphone Market. Vivo followed with its first phone, the V1 “music phone.” Both of these models were hits. They had sleek designs and creative features highlighting powerful speakers, beautification cameras, and big screens. The two brands followed BBK’s marketing playbook by leveraging celebrity endorsements, strong distribution channels, and effective retail-level promotions.Models including the Oppo R9 and the Oppo A33 helped OPPO elevate its domestic shipments by 109% in 2016. Vivo’s count ticked up 78% in the same year. OPPO and VIVO gained the second and third spots, respectively, as the brands with the highest sales in China in 2016, taking a combined market share of nearly 30%, only behind Huawei, according to data compiled by Counterpoint Research.
BBK started its international expansion in 2010 starting with Thailand, where the OPPO first announced Find 3 and then later showcased the Find 5, which was followed by the Find 7. In parallel, company expanded its presence in countries like Philippines, Myanmar, Vietnam, Indonesia, Malaysia, India, Bangladesh, Pakistan and many more regions. Company operates locally in these regions catering the needs according to the audience.
In 2013, Oppo launched OnePlus, a sub-brand that targets consumers outside China seeking premium specs at affordable prices, led by Oppo veterans Peter Lau and Carl Pei. Although OnePlus and Oppo have been vague about their common lineage, corporate filings shows that the Shenzhen based OnePlus Technology was founded in 2013 with an investment of RMB 50 million from Guangdong based Oppo Electronics as the sole investor.
The cluster kept growing. In 2010, Oppo released another sub-brand, Oppo Real, which focused on producing budget phones priced at around RMB 1,000 (USD 155). Oppo Real part its way from Oppo in 2018 and change its name to Realme. Vivo had done something similar in 2019, creating a sub-brand called iQOO, targeting users who are looking for high-performance gaming and streaming phones.
After 2018, Realme sought very high growth and in 2020 they released their first sub brand named Narzo, which focusses on sub RMB 1,000 (USD 155) market. Realme also launched a tech lifestyle brand named Dizo in 2021, which focuses on Feature phones and other consumer products. Following the same trend OnePlus launched its sub brand cum new series named Nord in 2020, to focus on the sub RMB 3,000 (USD 465) market.
Why so many sub-brands?
Basically, the business strategy of BBK changes according to the innovation trend. And they know the art of expansion very well. When the world was shifting from offline to online with the new e-commerce platforms coming into existence, they had smelled the shift of almost 40% population towards the world of internet and divided their business strategy into two major parts, Offline and Online. Following the same formula, Duan divided the Consumer Electronics segment into two parts majorly OFFLINE focussed and ONLINE focussed, and to reach each segment of the market BBK decided to launch Online oriented Sub-brands under OPPO and VIVO respectively, with each sub brand operating in a particular price category. And the ultimate goal is to safeguard their presence in the Market, because if any of the company fails other sub brand will overtake it.
The strategy of building up new brands to cover a broader customer base doesn’t jeopardize the original branding. For example, the selling point of Realme is cost-efficiency, while the label of OnePlus is high specs for the geek community.Cited a market analyst.
Understanding the Business strategy of BBK
BBK business strategy is basically based on two marketing techniques namely Push Marketing and Pull Marketing. Let us understand about both strategies cum marketing techniques in detail:
Push marketing is nothing but forcing or pushing the product of the brand in the market through promotions. Do you remember the hoardings featuring advertisements of Vivo and Oppo which is marketed by a celebrity. We used to see these advertisements almost everywhere. This type of marketing is called push marketing because these brands invest their money in advertisements and sponsorships so as to push their products into the market to gain the attention of public. I call this type of investing as short-term investing because through these huge promotions they are gaining customers only for that period of time. This is fine if the product offers good value but these brands simply doesn’t offer any good specifications with regards to the price. Generally this type of marketing strategy is applied where the product is not great because they know if they don’t invest money in marketing then they will lose the market share.
- Oppo’s F, A series doesn’t carry good specifications but with huge promotions they stand in huge selling smartphones. VIVO’s V series and Y series follows the similar trend.
This business model includes:
- These brand’s major market share is in offline smartphone industry. As per some online resources these brands offer high commissions (20%) to the offline retailers. However they gain high profits as their smartphones are priced high low specs.
- Sponsorships for major events like IPL (Vivo IPL) and sponsoring Indian cricket team (Oppo) and other events like BGMI, Pro Kabaddi etc.
- Advertisements in T.V’s and hoardings to increase brand value.
The main take away here is how Oppo and Vivo sell the products with low specifications. Majority of these brand’s smartphones line-up fits in mid-range category. These brands are offline targeted with high profit margins.
It is nothing but attracting customers by offering great value in their products. Here promotions are almost equal to none.This is followed by Oneplus, Realme and iQOO. We know how Oppo and Vivo came into existence but this company (Oneplus) is no way related to Oppo or Vivo in terms of business model. Oneplus came into existence with a bang by launching Oneplus 1 which was a sensation at that time for the specs it was offering at an affordable price. Later it grown into a premium brand by hiking their smartphone’s pricing year by year, even then they were good. As discussed the strategy of these brands are to gain customers through online and make them to stick with these brands. Obviously if a brand is offering great value to their customers then they will stick to this company – which is nothing but brand value. These brands invest money in R&D so that they can fine tune their product. I call this as long-term investment because they are gaining something i.e. customers in long-term unlike its siblings (i.e. profits).
- All Realme smartphones line-up are launched with best specifications in the market.
- Oneplus has only 2 series, one numbered and the other “T”, even these provide good specs (but not great) at affordable price.
This business model includes:
- No Advertisements.
- No Sponsorships.
- Online targeted products.
- Mainly money is invested in R&D.
The major take away here is Oneplus and Realme occupies the most online market share while its siblings take over the offline market share. Oneplus operates in Premium smartphone category and Realme operates in budget category. Here the profit margins are low but as these products sell more overall they gain profits.
The business model of BBK Electronics, focus at a single area (category) and try to get most out of it in all the possible ways (profits from high margins and profits from low margin in huge quantity).
Various Sub-brands under BBK (including segments other than smartphone).
It was founded in 2004. The main purpose of Oppo was to sell music equipments like DVDs, CD-ROMs, music players, headphones etc. Later they entered the smartphone industry. Their smartphone series are A, F, N, R, Find and Reno. Their smartphones are offline targeted but simultaneously they have a good series of smartphones under their name i.e. Oppo Find series where they used to introduce smartphones with new innovations. For example Oppo was the 1st smartphone brand which launched the smartphone with a Full HD display, 1st smartphone which came up with a Quad HD display, 1st smartphone with rotating camera, 1st smartphone with 50W supported charging in India.
Another sub-brand of BBK ELECTRONICS which was founded in 2009. Vivo is well known for its Music Technology, they provide great music hardware with Hi-Fi chips in their smartphones. Vivo smartphones were more focused on the consumers whose purchase priority is Camera and Music. They officially entered Indian Smartphone industry in the year 2014 same as its sibling Oppo. Their smartphones were all offline targeted and focused on Camera and Music. Their smartphone line-ups are V, U, X, Y.
Sub-brand of Oppo, which was established in 2018 by Sky Li who was the former vice-president of Oppo. This smartphone brand share similarities with its elder sibling Oneplus which is Online focused. First Realme smartphone i.e. Realme 1 came up with the Oppo branding, later they announced that it has become an independent brand but still it shares its resources like software(core) and service centres of its parent company Oppo. The reason why this brand came into existence is to tackle the ever increasing competition from Redmi.
This company was founded in 2013 by Pete Lau, who was once president of Oppo smartphone division. He started this company with his fellow-mate Carl Pei from Oppo who shared the same vision. Oneplus is a sub-brand of Oppo, it is because when it was founded all the resources were provided by Oppo and later it became a subsidiary of the Oppo. This brand doesn’t share any similarities with its siblings i.e. Oppo and Vivo are offline targeted whose sales were due to huge promotions where as Oneplus was online focused brand with meager advertisements. They entered Indian smartphone industry in 2014. Just after launching their 1st smartphone in India they had to face a legal case against YU which sub-brand of Micromax for using Cyanogen Mod in their smartphones whose rights were held by Micromax at that time. Soon they came up with another OS i.e. Oxygen OS which is now know as best Android OS. Their smartphones became a hit right from the start because of their aggressive pricing of their smartphones. Oneplus is most preferred smartphone in the premium segment in India with a market share of more than 40% considering the fact that in premium segment they are competing with Industry leaders – Apple and Samsung.
Vsun, a mobile manufacturing company, which is registered as Shenzen Vsun Communication Technology Co. Ltd was founded in 2011 by Xueying Zhang, a former executive of BBK Electronics, and is the Chairman and current owner of the company. Vsun reportedly entered into the smartphone business in 2011, but didn’t have a smartphone until two years later, when they announced V6 and i5. These two handsets were released in the month of Januray and February during the year 2013. They sported decent set of specification considering the technology at that time in the market. From 2016 onwards they made a shift towards Virtual Reality based products and smartphone manufacturing business. They have presence in India too, but never launched any smartphone, instead operates as a smartphone manufacturer for various OEMs, they claim that their India factory have capacity to produce more than 50million smartphones a year.
This is the brand under BBK Electronics, which makes wearables for Kids. This company operates mainly in China, Japan and Korea. Infact, it is the leading wearable seller in China and hold 3rd position in Korea. As BBK never focussed on expanding the brands under its Ed-tech portfolio, so they focussed on the expansion.
iMOO is the Ed-tech focussed brand which operates basically in education tabs and watch market. They have numerous of tablets and watch-phones in China. As far as the availability is concerned, the company is going to stick with its home country, i.e. China. We don’t expect the BBK Electronics to bring this overseas, even if they do, it won’t be anytime soon.
iQOO operates as a sub brand of VIVO in China. While it has debuted in India as an Independent brand. In March 2019, world’s second largest smartphone manufacturer BBK Electronics announced iQOO as a sub brand of Vivo as its newest member to its smartphone brand lineup alongside with Oppo, Vivo, Realme and OnePlus and introduced in India in February 2020 as an independent smartphone brand. The iQOO is also a performance focused sub-brand.
It is a performance oriented sub brand launched by Realme in 2020 to tackle down the competition from Redmi in budget segment market. It operates as a budget smartphone brand offering best possible specs and providing good price to feature ratio. It is a fully online oriented brand, which replaces the Realme C series.
A sub brand cum smartphone series launched by Oneplus in 2019. This series/sub brand focuses on providing high end specs at cheaper rates. This brand/series operates in the countries having competitive market.
In 2021 Realme announced Dizo as its new sub brand. This sub brand operates under Realme’s Tech life portfolio and it is focussed in the selling of AIOT products in South-East Asia.
It is a Karnataka based company, which is planned to be launch at the end of 2021. By going through some reports we can see that almost 40% of the stacks in this company is owned by Dizo, which makes this company a yet another sub brand of Realme Mobiles ultimately the BBK Electronics.
Apart from these Sub-brands BBK Electronics also holds major stack in almost 20 more companies. Among which they sell their Audio-Visual and Ed-tech products in USA under the name of two different unknown companies.