Date
16 October 2017
BlackBerry has teamed up with Foxconn to develop new devices as part of a turnaround plan. Photo: Bloomberg
BlackBerry has teamed up with Foxconn to develop new devices as part of a turnaround plan. Photo: Bloomberg

China holds out some hope for BlackBerry

Global sales for the once dominant BlackBerry are abysmal. The one and only market where the smartphone maker saw a gain in 2013 was China—from virtually nil market share in Q4 2012 to 0.1 percent in Q4 2013.

Formerly an indispensable accessory for business executives, heads of state and celebrities, the BlackBerry is now considered uncool by just about everyone and, in China, ridiculously expensive.

All that could change if John Chen, the newly-named chief executive and an expert turnaround specialist, has his way.

Chen, 58, a Hong Kong native who emigrated to the US when he was 17, boasts rich connections to China and years of encouraging US-China trade, which could potentially help BlackBerry find new customers and partners that it desperately needs, said Atlantic Media.

Already, he’s struck a five-year deal with Foxconn to build BlackBerry devices. The first phone of the partnership, the BlackBerry Z3, will retail for less than US$200.

Chen was brought on board in November after BlackBerry abandoned talks with China’s Lenovo due to national security concerns of the Canadian government. Whether he will reopen talks down the road remains to be seen, but Chen will have to satisfactorily address resistance to foreign companies owning vital electronic infrastructure.

A Canadian government official, speaking to Toronto-based Globe and Mail on condition of anonymity at the time, cautioned against reading an anti-Chinese policy into the BlackBerry case. “I don’t think anybody should be surprised that we would have concerns like that,” the official said. “We are open to foreign investment and investment from China in particular but not at the cost of compromising national security.”

BlackBerry, based in Waterloo, Ontario, Canada, operates a secure network that handles hundreds of millions of encrypted messages each day and its remaining customers include many government agencies, businesses and Fortune 500 companies. BlackBerry said last year that more than 30 petabytes of data traffic passes through its infrastructure each month.

Despite all its recent troubles, BlackBerry is clearly the phone of choice for Canadian government officials. And for their American counterparts too, said Forbes. The US Defense Department reports that approximately 470,000 of its 600,000 mobile devices are BlackBerry products. At the end of 2012, there were more than a million BlackBerrys in the hands of Federal and state employees. That includes the most famous of them all, President Obama, who is said to be addicted to his device.

That said, should Chen engage a Chinese suitor in the future, he’s well prepared. Chen served on the US State Department-funded National Committee on US-China Relations, was a member of President George W. Bush’s Export Council, and is part of the “Committee of 100″, a group of prominent Chinese Americans whose mission is to further US-China relations.

China remains a key challenge for all foreign manufacturers, as Chinese brands become increasingly dominant in the world’s largest smartphone market. BlackBerry’s release of the low-priced Z3 should make an impact, according to industry watchers. The phone will launch in Indonesia in April, and roll out to China by mid-summer, assuming the company can come to terms with Beijing as LinkedIn did recently.

Most of BlackBerry’s smartphone operations are blocked in China because the government cannot fully monitor communications routed through BlackBerry’s servers.

For the quarter ended Nov. 30, BlackBerry reported a US$4.4 billion loss and a 56 percent drop in revenue. But the company said it had US$3.2 billion in its war chest—plenty of cash to engineer a turnaround.

The new partnership with Foxconn will help reduce much of BlackBerry’s manufacturing costs. Foxconn, known for its contract work on Apple’s iPhones and iPads, will jointly design and manufacture most BlackBerry devices and manage inventory of the products.

RC

 

A strategist and marketing consultant on China business

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