Oppo, the world’s fifth largest smartphone vendor, is accelerating the expansion of its retail network in Southeast Asia, where the Chinese company is poised to overtake regional market leader Samsung Electronics.

Dongguan-based Oppo on Friday launched its first flagship store in the region in Bangkok, capital of Thailand, according to Jimmy Yi, president of Oppo Asia-Pacific. More flagship stores are expected to open in Thailand, Malaysia, Indonesia, Vietnam and the Philippines next year.

“Since entering Thailand as our first international market in 2008, we have built our success from partnering with local carriers and electronic retail chains,” said Yi in an email interview on Thursday ahead of the opening of the company’s Bangkok flagship store.

A customer examines a smartphone on display at the Oppo store inside the Consumer Electronics Exchange/Exhibition Center in Shenzhen’s Futian district. (Picture: Roy Issa)

He said Oppo’s retail expansion in Southeast Asia, where it is hiring more than 40,000 sales staff, is part of efforts to establish a competitive product portfolio and develop specific customer service programs for each market in the region, which comprise 11 countries with a combined population of more than 663 million.

That initiative shows how the major Chinese smartphone players are sharpening their focus outside China amid the continued sales decline in the world’s largest mobile phone market, where the domestic economy is feeling the effects of a protracted trade war with the United States.

While the near-term outlook for China’s smartphone market remains challenging because of channel inventories and longer replacement cycles, Southeast Asia has developed a strong demand for Chinese-brand Android handsets.

Total smartphone shipments in Southeast Asia from the major Chinese brands – including Oppo, Vivo, Xiaomi, Realme and Huawei Technologies – reached 19 million units in the second quarter to take a 62% share in the region, up from 50% a year earlier, according to a report by research firm Canalys in August.

About 75% of those shipments consisted of Android smartphone models priced in the sub-US$200 range, the report said.

South Korean electronics giant Samsung led that quarter, with shipments of 7.7 million smartphones in the region during the second quarter. Oppo was close behind, with shipments of 7.3 million units in the same period.

A man uses an Oppo smartphone at a shopping center in Chennai, India on October 8. India and Southeast Asia are Oppo’s two biggest markets outside China. (Picture: Xinhua)

“Oppo needs to provide more localized offerings, including promotions, shopping experience and after-sales service, to consumers in Southeast Asia to better compete against Samsung in the region,” said Zaker Li, a Shenzhen-based senior industry analyst with IHS Markit.

“The opening of flagship bricks-and-mortar stores is a significant localisation strategy because it allows local consumers to learn more about Oppo and its products.”

To be sure, other major Chinese smartphone are ahead of Oppo in expanding their retail presence in the region. Shenzhen-based Huawei, the world’s second largest smartphone vendor, and fourth-ranked Xiaomi Corp have been building their network of physical stores the past few years. Outside China, Huawei has focused its retail expansion in Southeast Asia and Europe.

Those initiatives have not gone unnoticed by Samsung, the global smartphone market leader. “Samsung is fighting back in Southeast Asia, where its leadership position has been challenged by Oppo, Vivo and Xiaomi,” said Canalys analyst Matthew Xie in a report in August.

He said Samsung hosted April’s worldwide launch of its latest Galaxy A-series smartphones in Thailand to show the strategic importance of Southeast Asia.

Oppo’s offline retail drive in the region follows its increased collaboration with online shopping platforms Shopee and Lazada, according to Yi. He said Oppo is expected to launch its 5G smartphones in the region next year.

The company currently has about 52,000 so-called retail points that cover online and offline stores, including those of its partners as well as its own shops.