Qiku, a company owned by Internet magnate Zhou Hongyi, has announced on May 6, Wednesday, that it is joining the smartphone industry with plans to rival with Xiaomi Corp. by selling high-quality and affordable handsets, the China Daily reported.
"I understand selling smartphones in China is a red ocean market, actually it is an ocean full of blood," Zhou said. Zhou used "red ocean" as description to refer to a market full of competitors in which profit margins are very small.
"But I am entering the market anyway because I believe there is no market that cannot be overturned and the leaders will not be always on top," Zhou said.
According to the report, Qiku, in a joint venture with Coolpad Group Ltd., will launch three handsets with Android operating system next month.
Zhou added that they will sell their device for 5,000 yuan ($800) and offer buyers more at lower prices.
An employee at Qiku told China Daily that each of the three handsets is aimed at low-, mid- and high-end markets with the lowest price at around 1,000 yuan.
The report said that most local cellphone vendors prefer lower prices to gain bigger profit in the highly competitive smartphone market.
The report added that prior to Zhou's announcement of the launching of Qiku's affordable devices, Xiaomi said that they will cut the price of the Mi Note Pro by 300 yuan.
Xiaomi lowered the price of the high-end phone, whose original price was 3,299 yuan, to maintain the company's market share lead, the report said.
Xiaomi plans to break into the market in India and other emerging markets where the competition is not as tough in a bid to evade a price war.