Smartphone manufacturer Oppo will lay off about 20% of its key software and equipment teams after merging operations with its subsidiary OnePlus. This is the first major integration of China’s mobile industry. It suffers from chip shortages and the economic shock caused by COVID. Struggling.

People familiar with the matter said that Oppo became the country’s best-selling brand in 2016 and is laying off employees after it has expanded too fast in recruitment in recent years and attacked the high-end market dominated by Apple. People familiar with the matter said that the layoffs affect important departments, including the team that customizes Android as an internal ColorOS, and the Internet of Things department that develops a series of wearable devices such as smart watches and earplugs.

Since mid-2021, Oppo has merged with the smaller high-end brand OnePlus and shared supporters with it to pool development resources and reduce overhead, but this will create redundant positions. One of the people familiar with the matter said that its mobile phone research and development team and overseas sales positions have not been affected by the layoffs. An Oppo representative declined to comment on the matter.

Shenzhen-based Oppo has built one of China’s largest smartphone brands by convening private retailers in rural areas and launching devices with larger and memory. However, in the fierce competition of companies such as Xiaomi and Apple, the huge investment in expansion into markets such as India, Southeast Asia and Europe has not paid off as expected. As the recovery of COVID has sealed off parts of the country, it is now dealing with a slowdown in China’s retail industry.

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The march into the adjacent arena was also unsuccessful. IDC analyst Bryan Ma estimates that Oppo’s share of the global smartwatch market is still less than 1% in a few years, while it only accounts for 1.7% of headset shipments.

Tarun Pathak, Counterpoint’s research director, said: “The company is spread out in multiple ways, attacking the high-end market, making big bets in the region and entering wearables.” “The layoffs may be both for savings. The cost is also to change the strategy.”

In its heyday, Oppo offered generous bonuses to retailers to gain market share, and commissioned Zaha Hadid Architects to design a headquarters building in Shenzhen, which included a 20-story vertical lobby and an art gallery.

Need to rejuvenate

The company is held by a secret employee fund that uses businessman Duan Yongping and his protégé Tony Zhuhai as the main founders, but did not disclose financial details. According to research firm IDC, Oppo’s global smartphone shipments surged by 37% in the second quarter, but this was not enough to maintain its fourth position.

So far, OnePlus has entered the US market more deeply than any other Chinese brand, but it has also failed to directly challenge Apple and Samsung among high-end customers. After US sanctions stifled important semiconductor supplies, local rival Huawei sold most of its equipment business in 2020, and the company was once the country’s largest supplier of smartphones.

© 2021 Bloomberg