Russian phone maker plans 2015 China entry

Yota dual-screen device gained attention after being given to Xi Jinping

Russian smartphone company Yota Devices plans to officially introduce its new flagship YotaPhone 2 in January 2015 to China, where the handset has already gained the limelight during the Asia-Pacific Economic Cooperation (APEC) meeting, news portal tech.qq.com reported Thursday.

The dual-screen device made headlines in the country after it was given as a goodwill gift by Russian President Vladimir Putin to his Chinese counterpart Xi Jinping on Sunday during the APEC meeting in Beijing.

Following this high-profile exposure, Yota Devices reportedly held a press conference in Beijing Thursday. The company's CEO Vladislav Martynov was quoted by the report as saying that a branch office would be set up in China in July 2015 and localize the production of phones for Chinese consumers.

Analysts said that the fairly good publicity stunt done at the APEC meeting benefits the future expansion of Yota Devices in the Chinese market, but in the long run, the company's gadget may suffer a cold public reception amid fierce competition from local smartphone makers.

Goods including phones and clothing used or worn by Chinese President Xi Jinping and his wife Peng Liyuan on foreign diplomatic visits usually gain a short-term surge of sales in the Chinese market, said Xu Hao, an industry analyst with Beijing-based market research firm Analysys International.

Xu told the Global Times Thursday that only a minority of Chinese such as rich people or tech lovers might consider purchasing the Russian brand's phones.

Previously, sales of Nubia smartphones on China's second-largest online retailer jd.com jumped to over three times higher than normal on April 1, after Peng used one of its models on March 29. Nubia is a mobile line owned by China's telecommunications equipment maker ZTE Corp. However, despite the temporary boost, the brand is still finding it hard to make a big impact in its home market.

The publicity stunt cannot be something Yota Devices is able to bank on to attain a strong position in China's heated smartphone battleground, and neither can it depend on its dual screens, said Xu.

According to the information on Yota Devices website, its Android-based YotaPhone 2 sports both a normal touch-screen display and an always-on secondary e-ink display, while most other smartphones only have one screen.

Zhang Yi, CEO of Shenzhen-based market research firm iiMedia Research, told the Global Times Thursday that the dual-screen feature is unlikely to appeal to most Chinese users, who do not have the habit of viewing things on an e-ink screen.

In addition, the pricing of the YotaPhone 2 does not seem like it will be an advantage in comparison to domestic phones with similar specifications.

Martynov refused to reveal how much the device will cost, but noted that the price is similar to models of other high-quality Android smartphone brands such as Samsung, Sony and Huawei, according to tech.qq.com.

If the report is reliable, it means that the YotaPhone 2 would cost 3,000 yuan ($489.80) to 4,000 yuan, while domestic peers are only about 2,000 yuan, said Zhang. The YotaPhone 2, unveiled in February, is not yet available for sale. The first YotaPhone is priced at 13,990 rubles ($301.50) on the company's official website. Around 12,000 units of the YotaPhone have reportedly been sold in Russia and four EU countries in the first month after it was launched in December 2013.

Now the company, founded in 2010, sells consumer electronics products in 16 countries and regions around the world.

Martynov considers China's e-commerce platforms as the top venue to sell Yota Device's phones, and would partner with jd.com by the end of the year, according to media reports.

Yota Devices could not be reached for comment by press time. NASDAQ-listed JD.com Inc failed to reply to Global Times inquiries by press time.

An even more serious issue that the Russian firm faces is that the Chinese industry is approaching total maturity, leaving fewer room for the development of new brands, said Zhang.

The latest report from the China Academy of Telecommunication Research under the Ministry of Industry and Information Technology shows that in the first nine months, domestic smartphone shipments stood at 284 million units, down 10.9 percent year-on-year.

Recent overseas expansion by domestic smartphone manufacturers may also be a reflection of the slow growth in smartphone demand, Zhang noted.

Internet company Beijing Xiaomi Technology Co migrated overseas user data out of the Chinese mainland in October in a bid to pave the way toward its international goal of expanding into 10 countries and regions this year.

Analysts also believe that traditional smartphone maker Lenovo's purchase of Motorola Mobility is a move to fast-track Lenovo's overseas development.