Vivo to Merge Sub-Brand iQOO Within Company to Cut Costs

Chinese manufacturer Vivo is planning a merger with its sub-brand iQOO, as per a report. Chinese publication 36 Krypton reported that Vivo has decided to merge its sub-brand iQOO within the company to cut costs and increase efficiency.

The publication added that discussions about a merger between Vivo and iQOO have been ongoing among high-level executives for a while now, who have been discussing how to go about merging teams such as brands and media strategies.

Since branching off from Vivo in 2019, IQOO has operated very independently from its parent company, and both companies have had very distinct approaches to planning, operations, strategy, promotion, and marketing.

However, both companies shared R & D, supply chain, channel system, media resource procurement, and other resources that required scale.

The report cited former iQOO employees who claimed that Vivo and iQOO had very different user markets despite being from the same parent company. iQOO also had its separate offline stores and counters.

Rumors have it that post its merger, iQOO could cease to have independent offline stores and counters. However, the report also added that the senior management was struggling with the integration of iQOO within Vivo, and therefore, the future of iQOO or its role within the company hasn't been determined as of now.

Although iQOO performed pretty well since its launch in 2019 with smartphones, such as the Neo series and its U and Z series, it struggled with competing brands like Redmi and Honor because of "being an online brand within the Vivo system channel", as per the report. The difference between online and offline prices during e-commerce promotions further hampered its sales, the report added.

A recent research report by CINNO, a third-party consulting platform, revealed that the Chinese smartphone market saw negative growth this January and that Vivo had a 13.5% decline in sales.

The sluggish smartphone markets since the pandemic also haven't helped turn around iQOO's fortunes. In the current saturated market, Vivo's best chance at survival is to cut costs, and perhaps, a merger is the only way out.

Source: 36 Krypton