A look inside China’s number 1 phone manufacturer

How Oppo hopes to expand beyond China’s Silicon Valley

A look inside China’s number 1 phone manufacturer

Oppo. OPPO. Oppo? Every time I say that word I’m met with the same confused stare. It probably sounds like I’m talking about a restaurant or something.

While being virtually unknown in Australia, back home in China Oppo is kicking goals in the insatiable, competitive Chinese smartphone market.

For fifteen years the company cut its teeth building ‘visual, acoustic products’ like MP3 players and DVD set-top boxes. It only started building phones in 2008, a year after the launch of the Apple iPhone, and with deceptively small beginnings. Early Oppo handsets were more comparable to the Nokia-like candybar phones that defined the early 2000s, basic and dumb but iconic nonetheless.

Eight years later the company now sells more smartphones in China than any other brand, leaving competitors vivo, Huawei, Xiamoi and Apple in the smog.

But Oppo’s meteoric rise in China is more of a reflection of changing expectations for the smartphone than anything else. What was once a young, exciting, premium product category, spawned by Apple in 2008, is now a more commoditised, ubiquitous device. And the divide between the expensive flagship and the cheep and cheerful clone is now narrowing quickly. For Apple, which leans on the iPhone for most of its revenue, this shift is already starting to slow the company’s growth abroad. In 2014 the company launched the iPhone 6 simultaneously in the United States and China with initially promising sales figures. Just two years later Chinese sales for the iPhone have fallen drastically.

Perhaps more worrying for Apple and other Western brands is the fact that Chinese electronics companies like Oppo don’t just want to dominate in China, they want to expand too. I’ve been covering Oppo’s expansion into the West ever since their Australian “soft” launch in 2014 atop Sydney Tower. At the time the company launched four competitive handsets in the one day, and they haven’t slowed down since then.

Fast forward to March 2016, following a few missed cold-calls from an Oppo public relations person I was offered the chance to fly to China to see the launch of the company’s next flagship, the Oppo R9. Just a day later I frantically rushed my Passport to the Oppo office in Sydney and picked up my expedited Chinese visa that Thursday.

At 11am on Monday March 14 2016 I boarded a flight to Hong Kong.

It’s 6:15PM in Hong Kong when I land. I stumble through airport security, grab my luggage and meet with two journalists and two PR people from Oppo’s Australian team. In a white van we all talk about local cell service and briefly about the trip. Along the way I keep accidentally staring directly into the setting sun, which is covered by a thick plume of smog.

By the time we reach the border to Shenzhen, China, the sun has set entirely. Border inspectors search the vehicle with a torch, check our Passports and visas and let our van plod along through to the city. I watch my phone battery count down every few seconds as it tries to ping social media websites blocked by China’s Great Firewall of China. Later in my hotel room several messages send all at once as I tunnel through to an Australian VPN.

In Shenzhen winter is still dragging its feet. The cold, polluted Spring air hurts to breath. I’m told that the pollution here is worse in Winter, so in a way we’re lucky to have missed the worst of it.

That night we all go out for dinner, drink shots of very strong rice wine and I eventually go back to my hotel room, tired but unable to sleep.

Shenzhen is a surprisingly young city. As part of broader economic reform in 1979 the Pearl River Delta region of China, which contains former fishing village Shenzhen as well as Dongguan, was granted special economic privileges by the government. Designated as a Special Economic Zone Shenzhen was transformed into a city in just a few years. By 2014 the city reportedly had a population of around 10 million people, up from the paltry 300,000 figure from 1979.

In Dongguan, just an hour’s drive north of urban Shenzhen, the seams of this sudden transformation are more pronounced. According to 2010 Census data Dongguan has a population of 8.2 million people, though it seems far less polished compared to Shenzhen, with plenty of rural qualities, especially in the long stretch of road between the two cities.

Today our small group is visiting Oppo’s main Dongguan factory. The facility produces 4 million handsets a month and feels like a statement of Oppo’s independence. Unlike a company like Apple, which designs a product and then outsources the assembly, Oppo claims to control the entire supply chain.

While driving through the grey main street of Dongguan I notice that Oppo stores are distributed with a similar consistency to McDonald’s restaurants back home. Again the depth of Oppo’s local presence is almost a statement in itself. On one street corner I see two Oppo storefronts in close proximity. Further down the road I see a few more.

When we eventually arrive at the factory we’re required to wear sterile plastic costumes over the top of our clothes and shoes. An airlock separates a main factory floor and the outside world, with a sinister, sealed metal passage spraying away all remaining dust.

Inside the factory we’re shown only select areas. One main attraction is a line of machines tasked with preparing and producing motherboards for Oppo’s R7 phone.

Throughout the process each motherboard is tested by different machines before a final inspection from factory staff. If issues arise at any point in the complex procedure staff at the facility step in to move the process forward. Some younger workers stop and wave to us, others punctually continue to move around the factory floor. A robot on wheels, singing in another language, moves parts around the area.

In a small office branching off from Oppo’s main factory floor we’re introduced to Lu Luma, Technology Planning Director at the company. In front of us, on a small coffee table, is a thick prototype device, the screen black and the phone powered off.

“We have the concept that is to be simple and also focused. We have about 2000 [research and development] staff [and] we would like to focus them on the development of our mobile products so that we can enhance the competitiveness of our products,” Luma says through a translator, before plugging in the thick metal device. On the screen a low-power alert flashes.

The phone in question supports Oppo’s new Super VOOC feature, a proprietary fast-charging technology which will completely recharge future Oppo devices in just 15 minutes. As promised, 15 minutes later, the phone is fully charged and ready to use.

“Increase of temperature can [be] contained in 3 degrees Celsius,” Luma explains, thanks to low voltage charging technology. Considering recent developments with the Samsung Galaxy Note 7, which prompted a global recall from Samsung, the focus on safety from Oppo is notable. This new system also means the device can be used while fast-charging.

Throughout the conversation a clear language barrier does prevent some more in-depth discussions. Luma is, however, happy to answer to indulge us when it comes to talk of Oppo’s competition. And despite its success he admits the company still sees itself as an underdog of sorts.

“We still see there are very big Apple in this market. We just occupy very small part in the market so we would like to enlarge our share increase our power in this field. So for certain period in future we will focus on the mobile market and try to do what we are good at better.”

Back in the cold Shenzhen city, at Oppo’s main office, I take a seat at a long, daunting white boardroom table. Smiling back at me, on the other side of the table, sits Katrina Lee, who is responsible for Overseas Marketing and Branding at the company.

Photo of Katrina Lee © 2014 Wazzup Pilipinas.

I’ve always found Oppo’s expansion to Australia to be peculiar. The company has little to no presence in the much larger European or North American smartphone markets, so I’d always assumed that the company’s 2014 expansion into Australia was more of a test for the company. With similar cultural and market characteristics this could eventually prepare the company for more lucrative Western expansion. At first Lee disagreed with my observation.

“I won’t really say we use Australia as a testing market. It doesn’t really sound like we have a very sincere strategy,” Lee said, though she also noted that “Australia is now the market we just want to have a try to see how we can survive. [To see] if we want to really have an appropriate understanding about the market and [to see if we can] also introduce our product to the audience in Australia. There is lots in common compared to China and also there are some differences compared to our home markets, that’s for sure.”

One key difference is the culture of the Australian smartphone sector. Australia, according to Lee, is a carrier-dominated market like the US. For many customers the entire process of buying a phone in Australia occurs through a carrier like Telstra, Optus or Vodafone. If a carrier supports your handset you could strike gold in the Australian market. But in China people are just as likely to buy a phone directly from Oppo rather than buying through a service provider.

“In China or in non-carrier dominated markets most of our efforts would be put down to have a direct communication with consumers. [So] when we are entering into the carrier-dominated market we certainly need to also put those kinds of efforts to make the carrier understand us. I believe by working with a new brand they also feel there is a certain risk. So we need to make sure they understand us well, [that they] like our product quality and [believe] in our marketing capability, as well as our commitment to the post-purchase service. So we need to make sure by working with us they don’t need to worry about the product, our marketing insight or our understanding [of the] consumer. [They also need to know that] we also have a very long-term strategy, so it will not be like a one year or two year thing. Like we will have this commitment to do this for good.”

It’s interesting to note that despite the fact that you can’t buy an Oppo phone in most of Europe or North America, customers in these regions are still bombarded with Oppo marketing. The company pays for product placement in America’s Next Top Model, for example, and is a main sponsor of the European football team FC Barcelona.

“The tactics [in each market] are different. So for example [with the America’s Next Top Model agreement] we didn’t really do such a thing in China, but we have a lot of local product placement [in that show focusing on] logo visibility.”

According to Oppo America’s Next Top Model has some cultural cache Australia, as well as other Oppo markets. FC Barcelona also still has some serious influence in China, so sponsoring the foreign team can equate to local brand awareness, even if it will go over the head of a local fan.

“So I will talk with [our Australian team] and ask, first of all do you think America’s Next Top Model sponsorship is a good move to the Australia in the first place. And then, what do you need. How can we make the benefit even more obvious to the Australia. When we say the global and the local, that is really what we are thinking. We want to have the global tonality or the influence or the prestige image but also make sure it’s not something very far away from our audience or our market. We need to work closely when we form our strategy and make sure each key tactic.”

In just a few years Oppo has also learnt a lot when it comes to the different approaches to marketing in China and other markets.

“When we are in China we do a lot of research. Even in China it is very big and very different [depending on where you live]. So we do a lot of research. We make sure we understand our target audience profile. With a company such as Oppo we really need to focus because we are not like a giant. We can’t do whatever we want. So that is the same idea when we do the overseas market. If we can not be sure, the decision will not be made by the big boss. We need to make sure we have the appropriate consumer survey to gather their feedback.”

This understanding also doesn’t just influence marketing, but also Oppo’s products and software. One key example is a tweak to Oppo’s camera software that only works in some regions.

“The definition of beauty can be different. Like probably you know that most Asian girls like white colour [skin], big eyes, because that’s pretty. And maybe that’s not really the definition of beauty in Western markets. [In Western markets] they want to be more healthy, more energetic, not quite about [being more white]. So when we are talking the idea of making [a photo] beautiful, we need to make sure beautiful is by your definition. So maybe the way we adjust or we need to be a little bit different. Like in Middle East they don’t appreciate that much either. So I would say like from this perspective or from our cultural ways some function will be disabled, some function will be available.”

Different markets also have different expectations from smartphone hardware too. For example, Lee noted that the Australian market had a preference for silver smartphones.

“I would say even though there are some differences there is still a lot in common. So for example people appreciate good design, good material touch and feel. They like taking pictures. They do a lot of social apps. However there are certain differences for sure. So for example, take something very simple like the screen size. I would say like in China maybe people use your smartphone watching the video clips very very often, maybe that’s the bigger the better. Or a lot of people prefer that way. Where maybe in Europe or in some other countries it’s not really about the size, people feel like [the screen size] is about right, it’s not about being bigger.”

These small but important tweaks to hardware, such as launching a device with a much bigger screen than the competition, is what Oppo is known for in China, and the company sees that ability to iterate quickly as a big advantage.

“We do see things are getting more commoditised, so it’s getting harder to differentiate your products in hardware perspectives. So I would say there are two ways we are looking at this. One, we actually spend a lot of effort on research. It’s about software and not [just] about hardware. So as a new brand we also try to [put a lot of effort into] building a perception. And perception cannot really be communicated through the one-way advertising. So when we are doing the America’s Next Top Model or FC Barcelona we’re actually trying to influence people through your life, through what you love to do everyday, and to try and make us likeable. Letting people know like who we are so you will see our characters and you will see the differences.”

While waiting to check-in for my flight to Beijing I notice an electronic billboard in Shenzhen Airport flickering away. An Oppo advertisement, animated and obscure, teases the launch I will be attending the next day.

In Beijing, later that day, the air is far more coarse than it was in Shenzhen. The next morning I ignore precautions from a Chinese air quality Twitter account and go for a short walk outside. When I return to my room I feel winded and my body aches.

Oppo has practically booked out the entire Pangu 7 Star Hotel in Beijing for international and local guests like us, so there are plenty of opportunities to stay alone in the hotel while others discover the rest of the city. Before heading to the event I eat from the lunch buffet in a huge dining area, alone and awkward. A dozen hotel staff members watch on. I flick through my Facebook feed in an attempt to feel less self-conscious.

A few hours later our Australian group walks towards the Beijing Performing Arts Center. Car horns ring in the distance. The air is still bitter and cold.

In front of the building I quietly take a photo of riot police. A metal detector guards the Center’s entrance. Inside the mood is buzzing. Local models pose with the Oppo phone, Oppo fans take photos, and local news crews crowd around presenters who show the device to a local TV audience for the first time.

Further inside people begin to take their seats as a saturated advertisement for the phone plays on loop. Radio devices deliver a live translation of the event, though the reception isn’t great. At times I just take my headphones off and interpret the event like a picture book.

As Lee had told us the day before, one of Oppo’s new main camera features focuses on giving the subject whiter skin and broader eyes. On-stage local presenters demo the feature and the audience laughs along with jokes that go over my head. I put my headphones back on but my in-ear translator sounds increasingly hurried and nervous.

At one point the stage goes dark and on-screen Oppo’s new ColorOS is demoed alongside an iPhone running Apple’s iOS. The software design is shamelessly inspired by Apple, though Oppo’s video instead focuses on very small speed differences between the two devices. In Oppo’s selective slow-motion tests ColorOS comes out on top as the faster operating system. Later discussions with product designers leave us with few answers when it comes to the similarities between Apple and Oppo’s hardware and software design. Instead the phone is described as an object inspired by “mountains” and nature.

Following the event we have some more hands-on time with the phone but aren’t given review units to take with us. The device won’t launch in Australia for a few more months.

That night, in the heart of Beijing, we visit a local hot-pot place. A boiling pot of liquid bubbles away in the centre of our table and raw food is delivered every few minutes, ready for us to cook ourselves. The restaurant is apparently very popular in China. An hour later we travel to a bar located atop one of Beijing’s tallest buildings. Window seats require a commitment of around AU$2000 in drinks. Through the window, looking at the city streets below, I can only see a few blocks at a time. The rest appear to fade away into a final toxic haze.