Many people know that Xiaomi, Honor, Tecno, or Realme don’t actually make phones themselves. But what if I told you they don’t even develop them? Many budget models are only sold under these brands. Other companies handle the entire development and production process from start to finish. These companies remain unknown to most people, but without them, there would be no “top for your money.” Let’s break down what this means and how it happened.
Advertisеment
Let's imagine you are making a brand new phone
Let’s say you want to make your own smartphone (or laptop, power bank, kettle, etc.). Where do you start? You might think about creating your own research and development center (R&D), building a factory, launching production, and arranging component supplies. But in reality, you don’t need to do any of that. Specialized companies will happily handle it all for you. They outsource either all or part of these tasks. There are three main formats:
Original Equipment Manufacturer (OEM): You design and develop the smartphone, create detailed technical specifications, and hand them off to another company. That company builds the product for you. Apple works this way. Apple designs the iPhone, and Foxconn assembles it. Samsung and some Dell products follow a similar model.
Independent Design House (IDH): What if you have a factory and hardworking workers but lack R&D skills? No problem. IDH companies will design and develop gadgets for you. They’ll hand you a specification for production. You can then produce it yourself or take it to an OEM. For example, Amazon’s Kindle and Alexa devices were developed by Amazon’s internal IDH Lab126 and manufactured by Foxconn and other companies.
Original Design Manufacturer (ODM): What if you have nothing except money and need everything done for you? ODM companies handle everything—from drawing the first design to tightening the last screw. You just tell them what you want. For example, you might say, “Make us a phone with a 100-megapixel camera, NFC, and a $150 price tag.” The ODM creates the product, produces the batch, and lets you sell it under your brand.
In real life, these categories often overlap. An ODM might sometimes act as an OEM or IDH. Confused? Don’t worry—the abbreviation tour is over.
Why Are Xiaomi Phones So Cheap?
Now, let’s answer the big question. Admit it—do you own anything from Xiaomi? I do. I have a fitness tracker, a kettle, an irrigator, a robot vacuum cleaner, and more. A couple of years ago, I even used their budget smartphone, the Redmi Note 8 Pro.
This phone wasn’t outstanding, but it worked fine. What struck me was the combination of its low price (around $140) and the features it offered. “Isn’t this the best value for money?” I thought. My finger hit “order” before I could second-guess myself.
But why was this smartphone so cheap? Here’s the secret: the Xiaomi Redmi Note 8 Pro isn’t really a Xiaomi product. Like most of the Redmi line, starting with the Redmi 3, it’s only Xiaomi in name. The same is true for many budget Chinese brands like Tecno, Realme, Meizu, Honor, Lenovo, OPPO, Vivo, and others.
To understand why, let’s look at Xiaomi’s history
Xiaomi’s Journey
Rewind 14 years. Back then, Xiaomi wasn’t a giant ecosystem with a variety of electronics. It was a promising startup with one product: a version of the Android operating system called MIUI. The OS was decent, so the company decided to build a phone to go with it. In 2011, the first Xiaomi Mi 1 was born.
The market warmly welcomed the Mi 2 and Mi 3. Almost flagship specs for $300 made Xiaomi a young, vibrant Chinese startup. But founder Lei Jun and his team had bigger ambitions.
“Selling 10-20 million phones a year is good,” they thought, “but in China, that’s nothing. Real growth lies in the mass market. We need to go there!”
But how could Xiaomi roll out a decent budget phone for $150 when they only knew how to make near-flagships for $300-$400? The solution was simple: get help.
Enter Wingtech Technologies
The first Redmi smartphone used blueprints and hardware (like the processor) from MediaTek. Various OEMs and ODMs manufactured it. Xiaomi’s role was limited to installing its operating system, promoting the phone, and selling it.
The Redmi 1, also known as Hongmi, offered 2 SIM cards, MIUI, 1 GB RAM, an 8 MP camera, and a good MediaTek processor—for just $130!
The second Redmi followed a similar story, but Qualcomm replaced MediaTek as the partner. This change likely helped Xiaomi enter foreign markets more easily.
Still, the first Redmi couldn’t compete with budget models from ZTE, Meizu, Huawei, or Lenovo sub-brands. Xiaomi needed a breakthrough—or risk losing the mass market.
The Invisible Giant
Luckily for Lei Jun, several top smartphone ODMs already existed in China in the early 2010s. The largest and most powerful was Wingtech Technologies. Xiaomi approached them in 2015 to upgrade their Redmi line.
Wingtech was founded in 2006 by former ZTE engineer Zhang Xuezheng. The company launched a factory and opened a research center in Shenzhen, China’s innovation hub. By 2008, Wingtech began ODM production of smartphones. At first, they worked with small, lesser-known companies. But in the early 2010s, major players like Meizu and Lenovo came knocking.
When Xiaomi approached Wingtech in 2015, Wingtech had everything ready:
- A fully-fledged turnkey smartphone platform. Xiaomi only needed to select features and customize MIUI.
- A full R&D cycle—from board and case development to testing and certification.
- Component selection, assembly, and mass production. Xiaomi could participate in the process, but Wingtech handled most of it.
In 2015, the Xiaomi Redmi Note 3 launched. It featured an all-metal body, fingerprint scanner, and a 4000 mAh battery—for just $140! Compared to the plastic Redmi Note 2, it felt almost like a flagship. Around this time, the phrase “top for the money” stuck to Xiaomi.
In 2016, the third Redmi became one of the best-selling smartphones in China and India. For Xiaomi, it was a success. But in reality, Wingtech did all the work.
Since then, Wingtech has been the ODM for all Redmi models, including the POCO line. Only in the early 2020s, after becoming a massive corporation, did Xiaomi start playing a larger role in development and design. However, most of the work is still outsourced to ODMs.
Why Is ODM Cheaper?
China has three major smartphone ODMs: Wingtech, Huaqin, and Longcheer. These companies serve not only Chinese manufacturers but also global giants like Samsung, Amazon, and Tesla. In 2024, 44% of all smartphones sold worldwide were made by ODMs. These three companies control 70-80% of the global ODM market.
Why is this approach cheaper? Here’s why:
- Existing Infrastructure: Large ODMs already have plants, machines, logistics, warehouses, and research centers. Their capital expenditures were made long ago and recouped. Building new facilities costs less compared to starting from scratch.
- Scale and Efficiency: ODMs serve many big customers at once. They achieve economies of scale, making it easier to increase production and reduce costs. Individual brands often can’t match this efficiency.
- Supplier Power: ODMs produce similar products for many customers. This allows them to combine purchases and negotiate better prices for materials and components. For example, they might say, “Lee, buddy, I’m buying 10 million microcircuits from you! Give me a discount!”
- Technology Access: Large ODMs have excellent access to technologies and components. For example, Wingtech acquired the Dutch semiconductor manufacturer Nexperia. Huaqin and Longcheer made important purchases too.
- Standard Solutions: ODMs repeatedly solve the same problem: “Make a decent smartphone for cheap!” Over time, they develop standard solutions. For example, Wingtech and Huaqin have mobile platforms—ready-made frames where only the camera, case, firmware, and minor parts change. This speeds up production and reduces costs.
The Downside
There’s a catch. When one large ODM serves many companies, it starts offering standard solutions to everyone. As a result, budget phones from different brands often look and feel similar. Even though each brand tries to create a unique design, the allure of speed and cost savings from ODM solutions is hard to resist.
ODM dominance also creates a vicious cycle. Companies order entire product lines from ODMs year after year. The ODM develops boxed solutions, which all its customers end up using. Competitors essentially share the same technological capabilities. Uniqueness becomes rare. Brands can only compete through marketing and positioning.
Refusing ODM services is risky. If you refuse, your competitor won’t. They’ll beat you with cheaper prices and faster releases.
Closing words
Personally, I think heavy ODM involvement in budget smartphones isn’t a bad thing. Yes, you end up with nearly identical phones for $150. But because of the scale and expertise of these companies, they pack a lot of value into those $150.
If you own a non-Apple smartphone, try finding out who actually made it. Let’s see which of the three ODM giants—Wingtech, Huaqin, or Longcheer—wins.
Source: habr
Support us
Winaero greatly relies on your support. You can help the site keep bringing you interesting and useful content and software by using these options:
