TAIPEI (TheStreet) -- Chinese telecom developer Huawei Technologies (Shenzhen:002502) came out with the MediaPad X1, billed in its homeland's press as the thinnest ever smartphone-tablet hybrid, at a major European tech show last week.
If you're thinking "Huawei? That's just a China brand for Chinese people who can't afford iPhones and Galaxys," you're not alone. But you're not totally right.
Huawei, along with its designed-in-China peers Lenovo (LNVGY) and ZTE (ZTCOY), are climbing the global smartphone market share charts despite a lack of oomph in major developed countries.
As of the fourth quarter last year, Huawei ranked behind only Samsung and Apple (AAPL) for most smartphones shipped worldwide, according to market research firm Gartner. Its full-year 2014 market share was 4.8%, up from 4% in 2012. Lenovo came in fifth with 4.5% of the market, up from 3.2% a year earlier. ZTE was No. 7 with 3.3%.
A lot of the growing market share comes from China, where analysts expect 450 million smartphone shipments this year. But Chinese brands are also dialing into India, Eastern Europe and Southeast Asia, other populous but hardly super-rich regions. The handset processors run slower but prices run lower.
"Chinese smartphone brands have gained market share overseas through a combination of 'good-enough' quality and competitive pricing, typically partnering with local mobile operators to distribute their phones," says Mark Natkin, managing director with tech market research firm Marbridge Consulting in Beijing.
Huawei touts its phablet unveiled at Mobile World Congress as a response to demand for phone-plus-tablet devices in China. The demand? Cheap.
"During its presentation, Huawei highlighted that its aim is to present products at an attractive and accessible price, while never failing to innovate and listen to the needs of its clients," state-run China Radio International said in an online report from Mobile World Congress.
The developer has also developed tight relations with the populous developing world through sales of telecom equipment to 140 countries, so carriers gladly buy its smartphones. "They already use Huawei equipment, so its bargaining power is pretty strong," says Wilson Miao, smartphone analyst with Taipei-based market research firm TrendForce.
ZTE claims deals in 140 countries as well. It's China's largest listed telecoms equipment company. Half its 40 million smartphones shipped last year went overseas.
Western countries have blacklisted both on fears they would spy for Beijing, but it's not the West that's pushing them up the charts.
Lenovo, the other big name from China, had already sold developing countries on its PCs. Its buyout of Motorola Mobility in January will only add to an expansion in mobile device sales.
Like consumers anywhere, those in the prime markets for developing Chinese brands would prefer faster, pricier devices but can't afford them. Until those countries experience a surge of new wealth, developers such as Apple and Samsung (SSNLF) will must rely more on developed countries.
Who to pick from China? ZTE's American depositary receipts have strengthened over the past year, though unevenly, while Lenovo's are falling. Huawei share prices have risen five times since this time in 2013. It might be best to go with a pan-China or pan-Asia fund that includes these shares but doesn't rely entirely on them for returns
You don't want to be left out completely as the Chinese charge ahead. "Building brand awareness among consumers is a major focus for all three of these vendors this year," Natkin says
At the time of publication the author had no position in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.