Can Vietnamese smartphone brands compete with leading foreign brands right here in Vietnam?
2018 was a boom year for a new local face in Vietnam’s crowded smartphone market. The appearance of the new Vsmart brand was viewed as being much more impressive than previous arrivals by Bphone and Asanzo.
Owned by VinSmart, a subsidiary of Vietnamese conglomerate Vingroup, of the four latest models under the Vsmart brand, two - Joy1 and Active1 - became officially available on December 15.
Brands and segments
While BKAV, the owner of Bphone, spent four years preparing for the launch of its first smartphone model, VinSmart spent just six months.
To rapidly materialize its goal, VinSmart opened a $33.9 million international-standard factory within the VinFast Industrial Complex at the Dinh Vu - Cat Hai Economic Zone in northern Hai Phong city.
Production capacity stands at 20,000 units a day and the company aims for initial annual capacity to be 5 million.
VinSmart signed a strategic partnership agreement last July with Spanish technology company BQ over the production of Vsmart smartphones and also acquired a 51 per cent stake in the company.
It has taken advantage of the Spanish startup’s strengths in almost all aspects of the production chain, ranging from product design and research and development (R&D) to production.
The Vsmart Joy1 and Joy1+ are for the low end of the market while the Active and Active1+ are in the mid segment, priced from VND2.5 million to VND6.3 million ($108 to $270).
“The average retail price for a smartphone in Vietnam in the third quarter of 2018 was $207, excluding VAT, and is predicted to be $200-$250, excluding VAT, by the end of the year,” Mr. Vo Le Tam Thanh, analyst at IDC Indochina, said. “Positioning the price at around that level is suitable.”
Previous Bphone products were positioned in the high-end segment but the long-standing security software company struggled with sales amid a lukewarm customer response.
Buyers in the high-end segment are careful when it comes to brands, quality, and prestige, and many other smartphones in the same segment have already long established their brand and guaranteed quality, Mr. Thanh added.
Similar to VinSmart, Asanzo, a TV maker, positioned its smartphone in the mid segment (under $217), with an October launch of its latest Asanzo S3 Plus, priced at VND2.58 million ($110).
With the launch, the brand accepted further losses to hold a certain market share, as it is fiercely competing with foreign giants such as Samsung, OPPO, and Xiaomi and the Vietnamese brand Mobiistar.
After being successful in manufacturing TVs in rural areas, the company’s CEO Pham Van Tam is confident about continuing to exploit potential rural areas with his new smartphones.
He believes the market could earn revenue of up to $7 billion per annum, while its key business sector, TVs, earns $1 billion. Thanks to its penetration into the smartphone segment, Asanzo reported record revenue of $198 million in 2017, up 1.8-fold against 2016.
After securing a position among the top five smartphone brands, Mobiistar last May found a new overseas market, India, in which Chinese smartphone maker Xiaomi took over No. 1 place from Samsung and where Samsung recently set up a new factory with a production capacity of 120 million units a day, in Delhi.
The market is gradually reaching a saturation point and a war has emerged in market share, with existing smartphone manufacturers not resting on any laurels and even investing more in products and brand identity, according to Mr. Thanh.
“Vsmart will push growth in the market, while the market will impact the brand in terms of price setting, product design, brand identity, and national distribution network.”
Local brands out in the world
Vingroup CEO Nguyen Viet Quang earlier announced that together with the group’s VinFast motor vehicles, it expects Vsmart will promote the development of Vietnamese industry as a whole and take Vietnamese brands out to the world.
With advantages in capital and R&D partnerships with local and foreign players, VinSmart plans to launch ten smartphones in 2019, in all segments, featuring the latest technology and trends in mobile phones.
With a similar ambition, BKAV CEO Nguyen Tu Quang told VET that it aims to be one of the leading smartphone brands in the world and will, as such, be an example for developing Vietnam’s smartphone manufacturing industry.
With investment of $22.3 million in Bphone and profit still to come, it hopes to help Vietnam go further in the international arena, according to Mr. Quang.
Despite its disadvantages, Asanzo’s CEO Mr. Tam believes the brand will stake out a 5 per cent market share over next two years and he is quite confident about its ability to understand users, particularly in rural areas, due to its distribution network of 6,000 agents.
He added that the hardest thing when manufacturing mobile phones is software, as while hardware changes little software changes nearly every day.
Vietnamese smartphone brands need to allocate resources on building strong production systems and distribution networks as well as good software staff to compete, he added.
Source: VN Economic Times
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