Why did Xiaomi and Huawei create sub-brands? – Chinese smartphone manufacturers love to create sub-brands or even subsidiary companies to sell the same kind of products. After all, we have the case of Huawei with Honor, Xiaomi with Redmi or POCO and even Oppo with OnePlus and more recently with RealMe!
This is something that has always bothered me… Why do these companies create another company or a sub-brand, to sell the same products?
In fact, it is not difficult to look for a mobile phone Honor, and see that we have a P30 Pro, or a Mate 20 Pro in a slightly different body and some different specifications to lower the price. Similarly, it’s also not difficult to figure out what the next OnePlus smartphone will look like if we look at the latest Oppo range.
So, what’s the idea?
First, we have to look at Xiaomi! A manufacturer that completely changed the paradigm, when it came to the market in 2011 to sell mobile phones only over the Internet!
The idea here was to cut the middleman, and work with very low margins to keep the price low and therefore appealing to the consumer
In case you do not know, smartphone manufacturers such as Huawei and Oppo need to have partners in order to get their products on the shelves. Partners who, of course, get a high percentage of their profits from sales.
So, these two companies decided to grab on the Xiaomi model, and deep down… Do exactly the same! Thus, Oppo created OnePlus, and Huawei created Honor. This, while increasing the focus on their main brands, since most consumers prefer to go to a physical store, rather than have them come online.
In short, the solution was to separate the physical store business from the online store business. Creating sub-brands.
Therefore, smartphones from major brands received the news first, while having a much more aggressive marketing to make them into lifestyle brands. However, the sub-brands remained focused on devices that were a bit more basic, but still very attractive in quality/price.
It was here that Xiaomi realized that he was starting to lose the impact on ‘Online’ due to the competition… But that unlike his rivals, he had no presence in store! So we made the opposite way, entered the physical store market.
But here, the idea of Xiaomi was not to fight on an equal footing in store shelves …
The Chinese giant chose to present in the traditional consumer market, handsets with excellent quality at lower prices. (Doing the classic ‘undercut’.)
But here we have to realize one thing, while Huawei and Oppo make the most of their money by selling smartphones. Xiaomi is a bit different, preferring to sell smartphones at cost, or even losing money, to have their return on services.
In addition, Xiaomi does not only sell mobile phones, but it also sells kitchen utensils, scooters, and even clothes. Because of this, Xiaomi can sell smartphones at much lower prices without affecting the company itself.
But what does all this have to do with sub-brands?
The most important market for these manufacturers is the Indian, where smartphones like Redmi 7 sell like hot rolls. And so, Oppo has created the RealMe sub-brand, to rival directly with Xiaomi and its smartphones.
But why? Did not they already have OnePlus?
Of course, but OnePlus is no longer the price-focused brand it used to be. Proof of this is the latest OnePlus 7 Pro, which is anything but cheap. That is why it was necessary to create a new brand, to compete in a different market.
That is, these sub-brands are essentially created, in order to get in and out of a market that would otherwise be impossible.
Why did Xiaomi and Huawei create sub-brands? “Besides, what do you think about all this?” Share your opinion with us in the comments below.
Learn more about Honor (here) and Redmi (here).