Chinese Smartphone Makers Enter US Market Despite Obstacles Met by Huawei

Although the US government has been restricting the market entry of China’s leading smartphone manufacturer Huawei in the name of “information security”, other Chinese smartphone manufacturers still try to enter the U.S. market.

SEE ALSO: Why are Chinese Companies ‘Unwelcome’ in US?

Huawei is now the world’s third-largest smartphone manufacturer, after Samsung and Apple. In the name of “information security”, the U.S. government has had imposed restrictions on Huawei and ZTE since 2012.

In 2012, the U.S. House of Representatives Special Intelligence Committee issued a report claiming that Huawei and ZTE threatened U.S. national security. Huawei and ZTE explicitly denied it.

Last month, under pressure from Congress and the U.S. Federal Communications Commission, AT&T abandoned a sales deal with Huawei.

In early February this year, six U.S. intelligence chiefs told the Senate Intelligence Committee that they should prevent Huawei’s products and services from entering the U.S.

Executives of Huawei and ZTE said that they still intend to enter the U.S. market.

Chinese smartphone competitor Xiaomi also has not yet entered the U.S. However, Xiang Wang, the company’s international business director, said in an interview with CNBC this week that Xiaomi is preparing for U.S. market entry.

“We are an internet company and we are very open. We are very friendly to consumers and very friendly to people from different countries. We always value the American market. The U.S. market is very important to us. We are very cautious in preparing to serve American consumers,” Wang said in an interview.

Unlike other rivals, Chinese smartphone manufacturer OnePlus has gained some market share in the U.S. As OnePlus told CNBC, its revenue rose 139 percent last year and U.S. sales accounted for 25 percent of its online revenue.

OnePlus products have not yet been sold through U.S. carriers.

Most U.S. consumers buy mobile phones with service contracts from their wireless providers rather than directly from manufacturers. Partnering with service carriers can help smartphone manufacturer grow in the U.S. through extra marketing and subsidies from carriers.

Without carrier partners in developed markets, market entry and expansion is difficult.

OnePlus CEO Pete Lau said in an interview with CNBC this week that OnePlus is currently in talks with US wireless operators. He does not believe that the unsuccessful effort between Huawei and AT&T will have an impact.

“In the North American market, OnePlus users and sales have been growing steadily, up dramatically over the past four years,” he said. “We entered the U.S. market as soon as OnePlus was founded. OnePlus has a good reputation in the North America. We believe that our reputation will help a lot, and we don’t think Huawei’s problems will affect us,” he said.

Chinese smartphone manufacturers have been expanding rapidly across Asia. In the fourth quarter of last year, for example, Counterpoint Research showed that four of the top five smartphone brands in the Indian market were Chinese manufacturers.

SEE ALSO: Why are Chinese Mobile Phones So Popular in India? Nine of the 10 Best-Sellers are Chinese Brands

By selling high-end phones at low prices, Chinese manufacturers such as Xiaomi, OPPO and vivo have achieved success. This strategy is attractive to markets like India, where most consumers buy cheap devices.

The U.S. market is still attractive because American consumers are willing to pay a higher price for smartphones. But China’s smartphone makers will face intense competition with Apple and Samsung, which now account for the vast majority of U.S. market share.