YotaPhone: Learning from Xiaomi in China

During the coldest winter in China’s mobile phone market, the “polar bear” suddenly broke in.

With the help of President Putin's message to President Xi Jinping at the APEC meeting, YotaPhone has entered the Chinese users' field of vision in a high-profile manner and is confirmed to be sold in China in the first quarter of next year.

However, YotaPhone seems to have come at the wrong time - the Chinese mobile phone market has long bid farewell to the era of high growth, and the competitive environment here is also the most intense in the world.

4G replacing 3G may be an opportunity for new manufacturers in the Chinese market, including Yota Devices. However, can Yota Phone, which is unfamiliar with the market, adapt to the environment here?

Don’t rush to make money in the first year

Russian mobile phone manufacturers are not global smartphone industry leaders and were previously "unknown" in China.

YotaDevices is a young company that was founded just three years ago. Its first-generation product, YotaPhone, was not mass-produced until the end of 2013. However, YotaPhone is coming on strong. In 2013, it entered 15 countries (regions) in Russia, Europe, and the Middle East, and will enter nearly 20 countries (regions) around the world by the end of this year.

"I don't quite know what the process was for Putin to make such a decision in the end," said YotaDevices CEO Vlad Martynov, but he told Chinese media that YotaDevices did not make such a request to President Putin.

Vlad Martynov analyzed that perhaps Putin wanted to convey a message - Russia has entered a new field, and Russian consumer technology products will open up cooperation with Chinese e-commerce.

The relevant person in charge of JD.com confirmed the cooperation with Yota Devices: "JD.com has been in close contact with Yota Devices. We are willing to introduce Yota Phone to China and help it achieve good sales performance."

In Vlad Martynov's opinion, the core competitiveness and innovation of YotaPhone lies in the fact that it is equipped with a second "electronic ink screen". In other words, YotaPhone is a mobile phone from the front, but it is also an Internet-connected "electronic paper book" when turned over.

However, YotaPhone still faces considerable challenges in entering China. "There is a clear polarization in the Chinese mobile phone market - a few companies have gained most of the industry's profits, but other companies are having a hard time," Wang Yanhui, secretary general of the China Mobile Alliance, told reporters.

According to the latest data released by the Ministry of Industry and Information Technology's Telecommunication Research Institute on the 13th, China's overall mobile phone market is experiencing an unprecedented sharp decline. From January to October this year, smartphone shipments reached 312 million units, a year-on-year decline of 10.4%. According to industry estimates, the unfavorable market trend may not change next year.

Vlad Martynov said that YotaPhone, which has an "electronic ink screen", has won more than 20 international innovation awards. However, Chinese market participants are not optimistic about its application prospects: "Electronic ink screen technology has been around for a long time, but Chinese mobile phone manufacturers have not applied it. Are they collectively blind?"

"I think any product will attract a certain number of users, but if a company wants to survive in the fierce market competition, it must achieve a certain sales volume and gain general recognition from consumers," the person told reporters.

The pricing and sales target of YotaPhone are particularly important. Vlad Martynov said yesterday that the pricing of YotaPhone is aimed at other high-end Android phones. Regarding the sales target, he said in an interview with reporters: "We have very high expectations, but we can't give a specific number."

Vlad Martynov told reporters that the launch of YotaPhone 2 in China next year is just YotaPhone's initial exploration of the Chinese market: "In the first year in China, making money is not the most important thing. What is more important is that we show consumers a new way to use smartphones. If this (dual-screen) trend continues in the future and everyone likes it, I think I will have no worries about making money in the future."

How the "Polar Bear" Makes Its Way into China

Vlad Martynov revealed two "big events" in the future of YotaPhone: in addition to the start of sales in China in the first quarter of 2015, another "big event" is that YotaPhone will sign a contract with JD.com at the end of this year.

This means that e-commerce channels have become the key to whether YotaPhone can gain a foothold in the Chinese market.

In the opinion of industry experts, Xiaomi has been able to achieve success in the fiercely competitive Chinese mobile phone market by seizing two "trends": the trend of smartphones replacing feature phones and the rise of e-commerce.

Vlad Martynov made no secret of his desire to learn from the Xiaomi model: "I have done a very careful study of Xiaomi's success story and the Chinese market, and learned some ideas that we used when we were doing business in Russia or Europe."

He has high hopes for China's e-commerce: "In terms of e-commerce, China is doing better than Europe and the United States."

However, Vlad Martynov also told reporters that he would also strive for cooperation with Chinese operators: "We are not only thinking about it, but we have actually been talking to operators. There is no contract signed here, so I can't tell you the specific details."

The sales model that YotaPhone will eventually adopt depends on negotiations with e-commerce, operators, agents and other channel partners: "If we get these large online channels, then we can do it online. If we get some agent channels, we will do it both online and offline."

In addition, to reduce costs, Vlad Martynov will produce all YotaPhone 2 in China. YotaDevices has established cooperation with two OEMs in Suzhou and Tianjin. YotaPhone has also received support from several Chinese content providers and App manufacturers to provide content and App development for the "ink screen".

Like many technology companies around the world, Yota Devices is targeting the 4G opportunities in the Chinese mobile phone market. If there is still a bright spot in the prospects of the Chinese mobile phone market, it is that 4G is replacing 3G.

According to official statistics, from January to October this year, 4G mobile phones have increased sharply in the overall sales of mobile phones in China. Currently, more than 6 out of every 10 mobile phones sold on the market are 4G phones. The industry predicts that the sales of 4G mobile phones will jump from nearly 90 million this year to more than 250 million next year.

However, China's smartphone manufacturers have already entered the "red ocean competition". Manufacturers who have sensed the opportunity have already prepared 4G mobile phones at the beginning of the year. It is expected that when YotaPhone is launched, domestic brands will scale up their sales. For YotaPhone, which takes 8 to 14 months to upgrade, it is still unknown whether it can withstand the test.

Wang Yanhui believes that YotaPhone should have entered the Chinese market earlier. If it had been a year late, the market opportunity might have been missed. "Coolpad's 4G development was very fast in the first half of the year, but in the second half of this year, many manufacturers launched 4G phones, and Coolpad's inventory increased a lot, and it felt the pressure of competition."

However, in the final analysis, it still depends on whether Chinese consumers recognize YotaPhone's "dual-screen" innovation.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.