On March 29, Vivo, a top Chinese smartphone maker, reportedly took steps to integrate its sub-brand iQOO further. The aim is to reduce costs and increase efficiency. According to a report by 36 Krypton, they have shared several links that require scale, including R&D, supply chain, channel system, and media resource purchase. However, planning, user operation, media strategy, on-site word-of-mouth marketing, e-commerce and other teams that are more brand-oriented and online businesses operate independently.
Despite this shared infrastructure, the business teams of iQOO and vivo have been operating independently. A high-level executive at vivo told 36 Krypton that merging teams such as brands and media strategies have been discussed. iQOO no longer retains independent stores and counters.
As of IT House’s post, neither vivo nor iQOO has responded to these reports. However, industry experts speculate that the integration is likely to create significant cost savings for Vivo. By eliminating duplicate teams, reducing overhead costs and streamlining operations, it will be able to achieve economies of scale.
Recent data from CINNO Research reveals that in January, the sales of the top 5 mainstream brands in the Chinese smartphone market all showed negative year-on-year growth, with a drop of 4.2%-23.5%. Only Xiaomi had a smaller year-on-year decline in sales compared to the overall decline in the Android camp. Conversely, OPPO, Honor, and vivo (excluding iQOO) all experienced a significant year-on-year decline, namely 13.5%, 19.2%, and 23.5%, respectively. As it stands, Vivo (excluding iQOO) ranks fifth in the Chinese smartphone market.
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In this competitive market, both brands need to survive, so they see this integration as a strategic move. The long-term impact on their performance in the Chinese smartphone market remains to be seen.
