Why did Xiaomi and Huawei create sub-brands? – Chinese smartphone manufacturers love to create sub-brands or even subsidiary companies to sell more and more products, sometimes very similar or even the same. After all, we have the case of Huawei with Honor, Xiaomi with Redmi and POCO. And even Oppo with OnePlus and more recently, with another brand that is starting to be successful, 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 at an Honor phone, and see that we have a P30 Pro, or Mate 20 Pro in a slightly different body, without some features to lower the price. Similarly, it is also not difficult to see what the next OnePlus smartphone will look like if we look at Oppo's latest flagship.
So, what is the idea of the Chinese Smartphone market ??
First, we have to look at Xiaomi! A manufacturer that completely changed the paradigm, when it hit 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
If you don't know, smartphone manufacturers like Huawei and Oppo need to have partners in order to put their products on the shelves. Partners who, of course, get a high percentage of the profits from sales.
Therefore, these two companies decided to take the Xiaomi model, and in the end … Do exactly the same! Thus, Oppo created OnePlus, and Huawei created Honor. This, at the same time that they increased the bet on their main brands, since most consumers prefer to go to a physical store, instead of having them come over the Internet.
In short, the solution was to separate the physical store business from the online store business. Creating sub-brands.
Therefore, the smartphones of the main brands received the news first, at the same time that they had a much more aggressive marketing to turn them into ‘lifestyle’ brands. However, the sub-brands continued to focus on slightly more basic devices, but still very desirable in terms of quality / price.
It was here that Xiaomi realized that it was starting to lose its impact on ‘Online’ due to competition… But unlike its rivals, it had no store presence! So it went the other way, entered the physical store market.
But here, Xiaomi's idea was not to fight on equal terms on store shelves…
The Chinese giant chose to present in the traditional consumer market, devices with excellent quality at lower prices. (Doing the classic 'undercut'.)
But here we have to realize one thing, while Huawei and Oppo make most of their money, by selling smartphones. Xiaomi is a little different, preferring to sell smartphones at cost, or even to lose money, to then have their return on services.
In addition, Xiaomi does not only sell mobile phones, it sells kitchen utensils, scooters and even clothing. 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 the Redmi 7 sell like hot rolls. That's why Oppo created the RealMe sub-brand to directly rival Xiaomi and its smartphones.
But why? Didn't 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. So it was necessary to create a new brand, to compete in a different market.
In other words, these sub-brands are essentially created, in order to enter and win a market, which otherwise would 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.