SHENZHEN (BLOOMBERG) - Smartphone maker Oppo is cutting around 20 per cent of staff in key software and device teams after it merged operations with affiliate OnePlus, the first major consolidation in a Chinese mobile industry struggling with chip shortages and Covid-19-triggered economic shocks.
Oppo, which in 2016 became the country's top-selling brand, is retrenching after expanding too rapidly on the hiring front in recent years and attacking a premium segment dominated by Apple, sources familiar with the matter said. The cuts affect important units including a team that customises Android into its in-house ColorOS, and an Internet of Things division that develops a spectrum of wearables such as smartwatches and earbuds, said the sources, asking not to be identified discussing a private matter.
Oppo has merged since the middle of this year with smaller high-end brand OnePlus, with which it shares backers, to pool development resources and reduce overhead, but that is creating redundant positions. Its research and development team for phones and overseas sales positions have not been impacted yet by cuts, one of the sources said. An Oppo representative declined to comment for the story.
Oppo built one of China's biggest smartphone brands by rallying private retailers in rural areas and tricking out its devices with larger batteries and memory. But heavy investments to expand into markets from India to South-east Asia and Europe have not paid off as expected against fierce competition from the likes of Xiaomi and Apple. It is now contending with a Chinese retail slowdown as Covid-19's resurgence locks down parts of the country.
At its peak, the company showered retailers with handsome bonuses to grab market share and commissioned a headquarters building in Shenzhen designed by Zaha Hadid Architects, complete with a 20-storey vertical lobby and an art gallery.
The company, closely held by a secretive employees' fund which counts businessman Duan Yongping and his protege Tony Chen as key founders, does not disclose financial details. Oppo's global smartphone shipments surged 37 per cent in the second quarter, but that was barely enough to keep its No. 4 ranking, according to research firm IDC.
OnePlus has made deeper inroads into the United States market than any other Chinese brand to date, but it has also failed to directly challenge Apple and Samsung Electronics among premium customers. Local rival Huawei Technologies, also briefly the country's biggest smartphone vendor, last year sold much of its device business after American sanctions choked off the supply of vital semiconductors.