"Today, I'm going to be candid with everyone: realme is hitting pause on its operations in the Chinese market!"

On the evening of July 16th, Xu Qi, Vice President of realme, posted an open letter to users on social media, officially announcing a hiatus for the young brand after seven years of operation in the Chinese market. Initially, realme achieved a remarkable feat by becoming the world's fastest smartphone brand to reach 100 million sales in just 37 months. On its seventh anniversary last year, it proudly announced that its global cumulative sales had surpassed 300 million units. Yet, now, it has quietly exited the domestic market.

Internal competition and market cannibalization among 'sibling' brands were significant factors prompting OPPO to have realme withdraw from the domestic market and focus on overseas expansion. However, a deeper underlying reason may be the rapidly diminishing market space for these sub-brands in the domestic market.

Recently, the renowned data research firm Omdia officially released its report on the domestic smartphone market for the second quarter of 2026. The report revealed that only Huawei and Apple experienced year-on-year growth in China, while all other brands saw declines exceeding double digits. In essence, the entire mobile phone market is accelerating its consolidation at the top.

There was a time when sub-brands were the "secret weapons" for major mobile phone brands to swiftly boost sales and capture market share. Now, their value is being called into question.

Sub-brands Under Collective Pressure

In July 2013, Xiaomi unveiled the first-generation Redmi phone, ushering in an era where mobile phone sub-brands "dominated" the mid-range and low-end markets in China. Particularly around 2017, Redmi, Honor, and Meizu Blue leveraged extreme cost-effectiveness to conquer the market, prompting OPPO and Vivo to swiftly launch their respective sub-brands, igniting a new wave of intense competition.

Combining official data from that period with Counterpoint figures, by July 2016, Redmi phones had sold an astonishing 110 million units; in 2016 alone, Honor shipped 72.2 million units; and before the release of the Meizu Blue Note 6 in 2017, Meizu Blue phones had accumulated sales of 45 million units. In terms of volume, these sub-brands' sales surpassed those of Xiaomi, Huawei, and Meizu's flagship brand phones.

But now, nearly all sub-brands have lost their former luster.

Take Redmi, for instance; in April this year, the Turbo 5/5 Max from the Redmi series arrived 15 months after the previous generation, failing to generate the same buzz and excitement as the Turbo 4. RD observation data indicates that the Turbo 5 series only achieved 60% of the Turbo 4's sales during its initial launch period. Similarly, the Redmi K90 series appears to be selling less well than its predecessor. According to Jiemian News, Xiaomi has reduced its full-year order volume for complete devices in 2026 by over 20%.

An employee at a Xiaomi Home partner store in a county in Jiangsu Province stated on social media that their store only reached 100,000 yuan in sales in September with the launch of the Xiaomi 17, while sales were as low as 50,000 yuan at other times.

Honor, another standout among sub-brands, although forced to become independent long ago, has long relied on the halo of Huawei's sub-brand for growth. Now, it too is facing market scrutiny. According to Omdia, Honor did not appear among the top five in the second quarter of this year. Although we know Honor is likely the sixth-ranked brand, it has been relegated to the 'Others' category.

(Q1 Domestic Mobile Phone Market Share)

(W19 Domestic Mobile Phone Market Share)

According to RD's observed mobile phone shipment data for Week 19, compared to Q1, it is evident that multiple sub-brands have seen a significant decline in market share: realme's market share dropped from 1.2% in Q1 to 0.8% now; OnePlus's market share fell from 3.0% in Q1 to 2.5% now; iQOO's market share decreased from 4.4% in Q1 to 3.3% now. The release of new products has clearly failed to stimulate the expected surge in sales.

Looking further back at sub-brands once entrusted with heavy responsibilities, Meizu Blue has already disappeared, Xiaomi's Civi series has little presence, with rumors suggesting it may be discontinued this year, and now it's realme's turn.

During the growth phase of smartphones, leading manufacturers like Huawei and Xiaomi heavily relied on multi-brand strategies to expand their product portfolios. The more brands and products they had, the more market share they could occupy, and the larger their overall market became. However, in the current era of market saturation, where the smartphone market continues to decline and consumers' replacement cycles lengthen, the drawbacks of multi-brand and multi-product line strategies have become glaringly apparent.

What adds even more pressure to these sub-brands are the current changes in the smartphone industry. Affected by rising memory chip prices and national subsidies, the premium market share is expanding while the mid-range and low-end markets shrink, becoming a clear trend. Yet, these sub-brands primarily target the mid-range and low-end markets.

Losing the Foundation of Cost-Effectiveness

To a large extent, it can be said that sub-brands were born for cost-effectiveness.

The first-generation Redmi phone, for instance, adopted the MediaTek MT6589 quad-core processor, commonly used in phones priced around 2,000 yuan at the time, but was priced at just 799 yuan. This jaw-dropping cost-effectiveness sparked a huge market response, and relying on extreme cost-effectiveness to quickly increase sales and capture market share became the mainstream development path for sub-brands under major mobile phone manufacturers.

This path was also successfully replicated in emerging markets like Southeast Asia and India, helping Chinese mobile phone brands quickly seize market share.

But now, a somewhat paradoxical change is occurring: the cost-effectiveness label of mobile phone sub-brands is weakening, while high-end flagship phones have unexpectedly become the new "synonym" for cost-effectiveness.

The reason behind this lies in the current surge in memory prices. Since last year, the rapid expansion of AI data centers has led memory chip manufacturers to allocate more resources to HBM and server storage, putting pressure on the supply of DRAM and NAND used in mobile phones and causing procurement prices to rise continuously. IDC states that mobile phone memory costs in the second quarter have risen nearly 300% compared to a year ago, accounting for over 65% of the material costs in some low-end models.

As a result, mid-range and low-end phones are quickly being dragged down by costs, while high-end phones, with their high margins, can absorb cost increases and are relatively less impacted. When mid-range and low-end phones are forced to raise prices, their cost-effectiveness advantage is weakened, while high-end phones become more attractive due to their stable prices. Especially Apple's move last year to offer "more for the same price" gave the once-aloof iPhone a perception of high cost-effectiveness, making it a new choice for many consumers looking to upgrade.

"With the same budget, you can only buy the entry-level model of the latest domestic flagship phone, but you can buy the previous generation's top-of-the-line or standard version's 'large cup' model from Apple," said a mobile phone wholesaler in Huaqiangbei, Shenzhen. "For consumers, iOS's smoothness, ecological stickiness, and Apple's brand resale value, at the same price point, suddenly become a 'cost-effectiveness' advantage."

Data has already proven this differentiation. In Omdia's report on the domestic smartphone market for the second quarter of 2026, Huawei and Apple were the only two companies to experience positive growth, with year-on-year growth rates even exceeding 20%, while other brands collectively declined.

Not only are high-end phones gaining traction, but many consumers' past concerns about buying second-hand digital products are being alleviated by the "cost-effectiveness" advantage. In other words, second-hand phones are also taking on the shift in consumer demand brought about by frequent price increases in new phones, further exacerbating the difficult sales environment for flagship new phones from brands and sub-brands.

After smartphones entered the saturation market, we can see that sub-brands' strategic focus has gradually shifted from relying on cost-effectiveness to capture market share to seeking a balance between scale and profit. However, facing the ongoing "escalation" of cost pressures, achieving this balance is becoming increasingly difficult.

Who Will Become the 'Abandoned Piece' in the Failure of Premiumization?

When mobile phone brands collectively launched sub-brands, it was to expand their market presence. However, the core strategic value was to differentiate them from the main brand and pave the way for the main brand to break into the high-end market. In other words, these sub-brands exist as "pieces" for their parent companies.

Yet, from the current perspective, except for Huawei, other Chinese mobile phone manufacturers continue to struggle in the ultra-high-end market share, with increasing pressure to break through to the high end. The results of their premiumization strategies can be described as underwhelming.

In the past two years, domestic brands have steadily advanced their premiumization strategies, indeed gaining market share, especially in the 4,000-6,000 yuan price range, where growth was significant, and Apple's share was impacted to a certain extent. However, with the expansion of the high-end market, the market has further concentrated towards Apple and Huawei, while other mobile phone brands have not gained much.

According to RD's observed domestic mobile phone market share for phones priced over 6,000 yuan in the first half of 2025, Apple dominates with a 65.81% market share, while Huawei captures 24.38%. Xiaomi, OPPO, and Vivo have shares of only 2.81%, 1.73%, and 1.59%, respectively, which is pitifully small. Moreover, since the launch of the iPhone 17 series, it has demonstrated a formidable market dominance, and its market share is likely to rise again this year.

The increasing difficulty for domestic mobile phone main brands to break into the high-end market has put sub-brands, initially tasked with capturing the low-price market, in an awkward position.

In the past, domestic mobile phone manufacturers engaged in intense competition in the mid-range and low-end markets while also seeking to break through to the high end for greater profit margins. This dual-track strategy stabilized their existing positions while bringing new imagination to the brand. However, with the continuous shrinkage of the overall smartphone market and the immense cost pressure brought about by the surge in memory prices, brands attempting to do both well may end up neglecting one at the expense of the other.

Take OPPO as an example; in 2018, the Find X debuted with a dual-track periscope structure at the Louvre in Paris, once stunning the entire industry. Since then, OPPO has concentrated its resources on building the Find X series to break into the high-end market. However, after eight years, although the Find X series has accumulated a reputation, it has failed to achieve significant sales. Meanwhile, OPPO's overall market share has been declining.

In the first quarter of 2023, OPPO still held the top spot in the Chinese mobile phone market with a 19.6% share. However, by 2025, it had slipped to fifth place domestically, with a share of only 12.7%. In the global market, its shipments fell by another 2.7% year-on-year in 2024.

A global storage supply crisis has brought new changes to the previously extremely stable landscape of the smartphone industry. In this context, for mobile phone brands like Xiaomi and OPPO, the urgency of defending their core market and ensuring survival may outweigh premiumization.

And once their premiumization strategies are paused or shelved, and they shift their focus to the mid-range market, the first issue they need to address may be the internal competition and cannibalization between sub-brands and main brands in certain product lines.

Even more pessimistically, sub-brands that can neither contribute to sales nor profits may very well be directly put on pause.

Perhaps, realme will not be the last brand to withdraw from the Chinese market.

Of course, from another perspective, temporarily abandoning the high-end strategy, contracting the battle lines, and waiting for the winter to pass may be the only way to conserve strength for an explosion after market recovery.