The rise and fall of Gionee: What really happened?

Remember Gionee? One of the first Chinese smartphones manufacturers to enter India recently went bankrupt following some bizarre series of events happening in the top management. Based out of  Shenzhen city of China, Gionee was founded in September 2002 and was one of the top Chinese smartphone firms in 2014 (according to Gartner). But what went wrong? Was Gionee not competent enough against the likes of Xiaomi, Oppo etc. or was there more to this story than just high competition? Let’s find out as I try to collate the downhill of Gionee.

gionee-fall


2013: Gionee enters the Indian market with its Dream D1 smartphone

Gionee entered the Indian market when Samsung was still the king of the budget segment and everyone bowed down to whatever Apple introduced with the new iPhone. Xiaomi, Oppo, Vivo and OnePlus were not existent in India.

The chinese manufacturer launched its Dream D1 smartphone and definitely had the first mover advantage. The Dream D1 was company’s response to Indian manufacturers like Micromax who had a significant market share then.

This followed a wave of phones from Gionee with competitive prices and honestly it was already making the lives of Indian manufacturers really hard. People were eventually shifting to a new foreign brand apart from Samsung and Micromax in the budget segment.

Gionee-trouble


Gionee targeted the offline market and never changed

At the time when Gionee entered the Indian smartphone market, people were not used to buying phones online. The local dealers still had the monopoly when it comes to smartphone sales. Consequently, Gionee strictly targeted the bricks and mortars model for its phones.

However, things were going to change. With the advent of Flipkart and talks of Amazon coming to India, people eventually started to have a sense of trust in the e-commerce platforms thanks to the discounts and deals they offered in the initial days. However, people still hesitated to buy something like a smartphone from an online store. Hence, Gionee continued its dominance in the offline market.

A report from CMR from 2016 says that Gionee actually had about 25-35 percent of market share amongst the emerging smartphone brands in India. Infact, it was leading the pile in the year 2013 and 2014 and was second to just Xiaomi in 2015.

The report said – “The cumulative leadership rankings for 2013-2015 were led by Gionee, Xiaomi and Panasonic. Gionee and Oppo are the only two brands that were in leadership positions in all the four major price brackets.”

CMR Report

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Things changed when Xiaomi entered the Indian market

Up until 2014, Gionee had a strong hand in the sub-20K segment with its on par specifications and above par smartphone designs. But, then Xiaomi entered the Indian market and set a trend of offering the ‘best specifications at an aggresive price’. Not only this but Xiaomi also strictly targeted online platforms through its flash sales model.

This triggered a hype around the new Chinese entrant and people went bonkers for Xiaomi phones. Not because they were cheap but the sheer value for money they offered to its customers.

Meanwhile, Gionee and other Indian manufacturers were rapidly making changes to their portfolios to compete with Xiaomi. No one could match the specifications that Xiaomi offered at that price. Don’t get me wrong, Gionee’s portfolio was great for an emerging market like India but Xiaomi disrupted with its Redmi series.

This followed by further pressure from the likes of Oppo, Vivo, LeEco, Huawei etc. which clearly made the sub 20K segment a hot topic in the smartphone world.


Oppo and Vivo entered late but still managed to overtake Gionee: Why?

Just like Gionee, Oppo and Vivo also concentrated on the offline distribution but how did they manage to overtake Gionee?

A simple answer would be clever marketing and strong distribution mechanism. Oppo and Vivo knew that India is going crazy for selfies and people do buy whatever the shopkeeper puts in his head. As a result, the sister companies went all over it with the marketing and distribution in offline category. On the other hand, Xiaomi was still going strong in the online category.

All this, when converted into numbers, suggested that Oppo and Vivo were amongst the biggest gainers at about 100 percent YoY from 2016-2017. On the other hand, Gionee lost about 46 percent of its market share in 2016. Xiaomi still had a dominant position in the market with over 300 percent YoY growth from 2016-17.

To be honest, Oppo and Vivo were not doing something different with their smartphones but they sensed the trend at the right time and exploited it.


Read Also: 5 Insanely Weird Smartphones You Never Knew Existed



Gionee was in trouble but not finished

However, that was not the end of the story. Gionee did try to make a grand comeback with its A1 smartphone series with Virat Kohli and Alia Bhatt on board. And honestly, it did work to some extent especially after the famous ‘selfiestan’ campaign that was not doubt, a blunt copy of what Oppo and Vivo were doing, but it still brought some decent sale figures for the Chinese giant.

However, the company failed to capitalize on this opportunity. The successor to the A1 i.e. Gionee A1 Plus was an absolute failure and this would actually be the beginning of the end for Gionee. From here, there was no sign of a comeback as the company just couldn’t impress the consumers.

Gionee CEO/Chairman: Liu Lirong


The End: Gionee’s CEO lost $144 million in gambling

The company was already counting its last days but it was never finished. In 2017, according to IDC, Gionee has a mere 2.2 percent of the market share. While another report suggested that the company lost 90 percent shipments in just one year.

Further, some sources revealed that the company is laying off 50 percent of the resources due to the cash crunch. However, this was still not The End.

A piece of unusual news broke the tech world on November 29, 2018 that Gionee’s CEO Liu Lirong has lost $1.44b at the Imperial Pacific Resort casino on the island of Saipan.

Obviously Liu didn’t admit this and said that the rumours were exaggerated but something was seriously wrong. Either way, we don’t really know what happened but soon after this incident, the Chinese firm filed for bankruptcy in December 2018.

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