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Case to the future

By Gao Yuan (China Daily) Updated: 2014-10-06 08:25

Tian Zheng, an analyst at local research company Analysys International, said: "The incredible smartphone demand has created a tremendous market for global vendors, but we are seeing local brands quickly eroding market share from overseas giants such as Apple Inc and Samsung Electronics Co Ltd."

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Chinese shoppers will buy more than 400 million new smartphones this year and the amount is on track to break 500 million by 2016, according to Analysys International.

OtterBox's sales target appears to be formidable as its goal of reaching 5 percent of the Chinese smartphone users translates into sales of roughly 25 million cases every year, based on current market forecasts. With the price for a midrange Otter-Box case being around $40, it would mean a sales revenue of over $1 billion.

However, on the face of it, that seems to be more of a long-term goal as most of the overseas companies that OtterBox has partnered with are losing ground to local smartphone vendors in China. To offset this, the company needs to supply more products to local brands like Xiaomi and Huawei, said sources.

According to Analysys International, South Korean electronics giant Samsung and US California-based Apple are the only two overseas brands that made it to the top 10 smartphone makers list from April to June. The combined shipments of the two companies' accounted for less than a quarter of the total shipments and have been shrinking steadily. According to Nisbet, Otter-Box will build phone cases for Chinese smartphone maker Lenovo Group Ltd's soon-to-be-released next generation flagship device later this year.

"I think we have to be ready to learn from local partners such as Lenovo," Nisbet said. Accessories made by OtterBox will also be sold in Lenovo's rapidly growing retail stores across the nation. Nisbet hoped the well established retail channel of Lenovo will boost smartphone case sales.

Lenovo was the largest smartphone maker in China during the last quarter, beating longtime leader Samsung and rising star Xiaomi, according to industry research firm IDC.

The top priority for Otter-Box would be to further strengthen its ties with Lenovo, Nisbet said.

"I hope the OtterBox-Lenovo partnership would be an example to show the local vendors what a valuable partner we can be and how we can help Chinese device manufacturers grow their businesses," he said.

Nisbet expressed confidence that OtterBox will have the opportunity to engage in more meaningful relationships with other Chinese device makers in the future.

"We are learning how to make the right product for this market, how to have the right partnerships and how to be a good partner as well."

The company also kicked off the online sales of its smartphone cases in China, by teaming up with online retail websites like Tmall.com and JD.com.

"The online sales (in China) far exceeded our expectations," said Nisbet. "That's an indicator that Chinese customers are aware of our brand and product. Now we have to find a good way to get our products out to the customer through retail channels."

The company also needs to evolve strategies to ensure that the right product reaches the right customer and to make the whole process a seamless transaction through online shopping.

"We've really taken time to understand that. But having good partners in China has made things much easier for us," he said.

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