This article is part of KrASIA’s “Spotlight” series, where our writers from different editorial tables work together to give you a closer look at the tech scene in Asia. Read more about BBK’s impact in Southeast Asia here, and learn about how OnePlus cornered India’s premium smartphone category here.
The Chinese media has pinned different labels on Duan Yongping, the founder of BBK Electronics. To many, he’s known as the “godfather of the Chinese smartphone industry.” To the western world, BBK is nearly an unknown name, yet, it was instrumental to the rise of five globally best-selling smartphone brands—Oppo, Vivo, Realme, OnePlus, and Iqoo.
Duan is also called “China’s Warren Buffett” for his career as a professional financier. In fact, in 2006, he had lunch with Buffet in New York after winning a charity auction with a bid of USD 621,000. He brought along his protégé, Colin Huang, who was an engineer at Google at the time. Duan said he used the chance to say thank you to the legendary investor, whose philosophy inspired him throughout his career.
Duan is a reclusive businessman who has barely accepted any interview requests in the past decade. Yet, he’s also an active and approachable blogger on stock forum Xueqiu.com, where he has nearly 400,000 followers. In the forum, he posts investment tips, shares comments on stocks, and interacts with followers. He also shares news about BBK and companies that are under its umbrella.
By viewing Oppo, Vivo, and Realme as part of the same group, BBK is the world’s largest smartphone maker, with a 19% market share in 2020, per recent data by Counterpoint Research. The three brands sold 262.7 million units in 2020, outperforming bigwigs such as Samsung and Huawei. That’s without counting OnePlus and Iqoo, whose sales were not listed by Counterpoint.
However, the exact nature of the relationships between BBK and these phone brands is hazy.
BBK has always maintained a scant public-facing presence, while Oppo, Vivo, Realme, and OnePlus have downplayed their undeniable shared history and lineage. Instead, these brands have highlighted their independence, drawing attention away from the opaque connections among them.
Electronics powerhouse in the making
In 1995, Duan founded BBK Electronics in Dongguan, a manufacturing city in Guangdong province. Before setting up BBK, Duan served as general manager of Zhongshan Yihua group, a company that manufactured Subor (“Xiaobawang”), a budget gaming console meant as an alternative to Nintendo’s NES, in the early 1990s.
At its beginning, BBK cast its eye on educational devices, audiovisual equipment, and communication gadgets. The firm manufactured e-dictionaries, corded telephones, VCD players, and MP3 players. Thanks to an extensive offline sales network that utilized catchy and memorable advertising slogans, BBK gained a solid footing in the domestic electronics market.
However, in 1999, when the company’s mainstay audiovisual segment was besieged by foreign brands like Sony, Duan spearheaded a company restructuring. He decided to divide BBK into three separate businesses: Audiovisual Electronics, Education Electronics, and Communications Electronics.
The audiovisual division led to the creation of Oppo in 2004, a sub-brand that initially focused on the production of DVD, MP3, and MP4 players. It later shifted its major business to phones, led by former BBK executive and another of Duan’s protégés, Tony Chen. In 2009, Vivo was formed on the basis of BBK’s communications division, led by BBK veteran executive Shen Wei. The education electronics division, on the other side, has kept the same name, BBK Educational Electronics (EEBBK), and still produces devices like smartwatches for school kids and electronic dictionaries.
As Oppo and Vivo developed as spinoff private companies, BBK’s stakes and management participation in these companies remains closely guarded private information. Most media outlets, however, still refer to BBK as the owner of Oppo, Vivo, and the other associated brands.
According to some media reports, Duan’s stake in BBK, as well as BBK’s partial ownership of its offshoots, have been diluted, as more investors joined the boardsand employees have acquired shares through employee stock ownership plans (ESOPs). At BBK, Duan pushed to adopt an ESOP structure and reduced his own shareholdings from 70% in 1995 to about 17% in 1999. The same structure has reportedly also been adopted by Oppo and Vivo.
KrASIA
It remains unclear why BBK obfuscates its connections with these phone brands. A plausible hypothesis is that brands like Oppo, Vivo, and OnePlus want to project an image of independence. Perhaps Duan’s reserved personality also shaped the contours of this business direction.
Commercially speaking, having different brands allows BBK to extend its reach across all smartphone categories, from budget to premium, while offshoots can experiment with minor variations of similar devices for different markets. Brands can also target different market segments with distinct promotion strategies.
An Oppo spokesperson told KrASIA that “Oppo and BBK are two independently operated companies with investors in common.” The spokesperson confirmed that OPlus is an investor that supports Oppo, OnePlus, and Realme in areas like investments, supply chain, and manufacturing. The three companies are independently owned and operated, Oppo said.
Vivo, on the other hand, told KrASIAvia another spokesperson that it originated from BBK Electronics, but started to use the name Vivo for its products in 2011. Vivo is “not a subsidiary of BBK Electronics and it is not connected to Oppo,” said Vivo’s spokesperson.
Read more: How OnePlus cornered India’s premium smartphone market | KrASIA Spotlight
The rise of Oppo, Vivo, and other sub-brands
In 2008, the Chinese phone market was carved up by foreign brands like Nokia, Motorola, and Samsung. Oppo debuted its Smile Phone that year, marking the BBK circle’s entry into a sector that would come to define so much of our lives. Vivo followed with its first phone, the V1 “music phone.” Both of these models were hits. They had sleek designs and creative features highlighting powerful speakers, beautification cameras, and big screens. The two brands followed BBK’s marketing playbook by leveraging celebrity endorsements, strong distribution channels, and effective retail-level promotions.
Models including the Oppo R9 and the Oppo A33 helped the firm elevate its domestic shipments by 109% in 2016. Vivo’s count ticked up 78% in the same year. Oppo and Vivo gained the second and third spots, respectively, as the brands with the highest sales in China in 2016, taking a combined market share of nearly 30%, only behind Huawei, according to data compiled by Counterpoint Research.
In 2013, Oppo launched OnePlus, a sub-brand that targets consumers abroad seeking premium specs at affordable prices, led by Oppo veterans Peter Lau and Carl Pei. Although OnePlus and Oppo have been vague about their common lineage, corporate filings show that Shenzhen OnePlus Technology was founded in 2013 with an investment of RMB 50 million from Guangdong Oppo Electronics as the sole investor.
The cluster kept growing. In 2010, Oppo released another sub-brand, Oppo Real, which focused on producing budget phones priced at around RMB 1,000 (USD 155).Oppo Real would spinoff from Oppo in 2018 and change its name to Realme.Vivo would do something similar in 2019, creating a sub-brand called Iqoo, but targeting users who are looking for high-performance gaming and streaming phones.
“Compared to smaller brands and manufacturers, these sub-brands, or twin brands, which derived from a larger company, are able to have a greater say in the supply chain due to a higher purchase volume,” Wang Xi, a smartphone market analyst at research firm IDC, told KrASIA. “And the strategy of building up new brands to cover a broader customer base doesn’t jeopardize the original branding. For example, the selling point of Realme is cost-efficiency, while the label of OnePlus is high specs for the geek community.”
Breaking down their market share geographically, Vivo, Oppo, and Realme had a combined 36% control in China in Q4 2020. That puts the BBK network ahead of leading brand, Huawei. In Southeast Asia, they reached a staggering market presence of 51% in the second quarter of 2020. In India, the trio accounted for over 37% of the smartphone market in Q4 2020, with OnePlus controlling 27% of India’s premium smartphone market.
Read more: Here’s how BBK’s offshots conquered Southeast Asia | KrASIA Spotlight
What does the future hold for BBK and its sphere of influence?
Unlike aggressive competitors like Xiaomi, these BBK offshoots are still privately held and have never indicated plans to go public.
Duan stays out of the spotlight, and that characteristic is reflected in BBK as well. Most customers do not know that Oppo, Vivo, OnePlus, and Realme share the same corporate roots.
Only recently, Oppo and OnePlus officially integrated their research and development departments, in a move to maximize resources.
The man who started BBK has been living in California since 2001, when he reportedly stepped down asthe company’sCEO.That same year, just as the dot-com bubble burst in the United States, Duan bought 2 million shares of NetEase at a price of one dollar apiece. This investment gave Duan a 50-fold returnjust two years later, when NetEase waded into online gaming.
Duan still figures as the chairman of BBK, according to Bloomberg, even though the exact nature and details of his involvement with BBK and its peripheral companies is unknown. What’s sure is that the track of his business management philosophy is part of the core values of these firms. Oppo and Vivo share one term—benfen—in their corporate manifesto, a word thatis also often emphasized by their founders in their public speeches. The term means “to adhere firmly to one’s own duties and principles,” and was often brought up by Duan during his time at BBK. Colin Huang, who eventually founded Pinduoduo, also imprinted the idea onto his company.
Duan seems to practice the principle of benfen in his personal life. When one of his Xueqiu followers asked about his perception of success, he wrote, “being able to live your own everyday life is an achievement.”