On March 27th, it was reported that OPPO smartphone’s European business is planning to withdraw from Germany and Britain, leaving only a small division to handle basic business needs. Meanwhile, the company’s operations in Italy, Finland, Spain and France continue to grow, 36Kr reported.
OPPO commented on the move: “At present, the smartphone industry is not expanding and our key markets will be adjusted and maneuvered in stages. Our attention to the European market remains firm, and we will invest in key markets accurately and efficiently in the future. On February 15th, we released the international edition of the OPPO Find N2 Flip in London, England, and on February 27th, we took a variety of products and technologies to participate in the 2023 Mobile World Congress in Barcelona.”
The European market is known for its high sales cost. “Although products can be sold, they don’t make money, the ROI is not high, and (OPPO European business) is losing blood,” one person close to the matter said. For the European market, the person described it as: “I am not willing to take [the risk] because I will lose money. (Agents) basically won’t re-invest.”
For the European market, the general consensus in the industry is that long-term investment is needed, the effect is slow, and the cost is high. “The European market is inherently difficult, and it will only be more difficult in this case,” another source said.
Because of the Russian-Ukrainian war, inflation and other macroeconomic reasons, consumption in Europe has dropped greatly. According to Counterpoint data, in 2022, the shipment of smart phones in Europe was only 176 million units, down 17% from 2021 and the worst year since 2012. In the fourth quarter of 2022, OPPO shipments decreased by 39% year-on-year. According to the latest data, OPPO’s domestic shipments continued to decline by 12.9% year-on-year in January 2023.
According to one understanding, because of the arduous market in the UK, OPPO did not adopt a general provincial agency trading model but was directly supplied by headquarters, a model in which the brand side took up the bulk of the work. However, even if it operated in direct supply mode, OPPO failed to make substantial headway in the British market.
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In addition to high operating costs, OPPO also faces thorny patent litigation problems in Europe. After the company entered the European market, Nokia sued OPPO for patent infringements in Finland, Germany, Sweden, Britain, the Netherlands and other countries.
Germany is the first big European country to explicitly ban OPPO. OPPO’s presence in Germany is virtually untenable unless it makes a deal with Nokia to reach an agreement, pay high patent fees, or awaits a new court ruling. When the external environment suddenly changes, the company must have a clear understanding of itself. OnePlus’s return to OPPO, its focus on the online market and its contraction from Europe are all more rational decisions in a depressed environment.