Company

This man created BBK, OPPO, VIVO, OnePlus and more

Although Chinese smartphones have gained some market share overseas, most foreign consumers may not be familiar with the founders of Chinese mobile phone brands. 

Even geeks who are interested in digital technology may know only Lei Jun, founder of Xiaomi, and Ren Zhengfei, founder of Huawei. 

But what few people know is that a man was involved in the creation of four brands of mobile phones, BBK, OPPO, Vivo and OnePlus, and still owns a stake in these companies.

He is Duan Yongping, a low-key Chinese investor who emigrated to the United States in 2001. 

These seven brands originated from the same boss

To tell the story of Duan Yongping, we should start with the relationship between five Chinese brands. These five brands are: BBK, OPPO, VIVO, and OnePlus,. Maybe there will be another realme and iQOO now. 

Although all seven brands are famous for making smartphones, it is puzzling that they are in fact the same faction and have a common individual shareholder, Duan Yongping.

Simply put, Duan Yongping created BBK, and then BBK spawned all the other companies.

In 1995, Duan Yongping founded BBK, in Dongguan City, Guangdong Province, China. The company has three different businesses, namely, cordless phone, VCD and portable e-dictionary. 

In 1999, Duan Yongping divided the three main businesses of BBK into three, namely, BBK Education Electronics Company, BBK Audiovisual Electronics Company and BBK Communications Electronics Company. The former head of BBK, who was in charge of three different businesses, became the CEO, of three independent new companies and held a certain stake.

In 2001, under the matchmaking of Duan Yongping, the three BBK companies jointly funded the registration of the OPPO brand. By 2003, BBK Audiovisual Electronics Company went bankrupt, and with the help of Duan Yongping, the head of the company, Chen Mingyong, and almost all the employees of the company joined the newly established OPPO company.

BBK Education Electronics Company and BBK Communications Company are headed by Huang Yihe and Shen Wei, respectively. One of the two companies sells portable e- dictionary and e-study kit for K1-K9 students, while the other makes non-smartphones that focus on sound quality.

In 2011, Android systems became popular, and in order to make consumers no longer think that the phones they sold were non-smartphones of the last era, BBK Communications Company registered a new brand VIVO, and gradually deactivated the BBK trademark in mobile phone products in the following years.

On the other hand, OPPO founded its wholly-owned subsidiary OnePlus in 2013 to complement its competitiveness in the male consumer market because of its initial brand positioning for female consumers.

In 2018, BBK Communications Company (also known as VIVO) established a wholly-owned subsidiary iQOO. And OPPO released a new sub-brand, realme.

So far, BBK, founded by Duan Yongping, has spawned seven brands, six of which are smartphone brands. BBK is no longer used in smartphones, only in e-study kit.

In the early days, when all three companies were called BBK, they shared each other’s offline dealers. But as the three companies developed independent brands, they began to compete fully with each other.

What these companies have in common now is that they all had Duan Yongping’s participation in their founding period, and Duan Yongping still owns shares in it. 

Use an analogy to illustrate the relationship between these companies: they are more like brothers and sisters who share a common blood but have long been separated without connections. They usually do not interact with each other, or even snatch consumers in the same market. But if one company has a fatal crisis, other companies may be driven by co-shareholders to lend a helping hand.

Duan Yongping’s early Entrepreneurship era

Because of Duan Yongping’s success in the field of investment in the middle of his career, some media have called him the Chinese version of Buffett. But looking at his career, you will find that a more accurate description of him should be the Chinese version of Masayoshi son.

Duan Yongping’s early success came not from investment, but from his personal skills in electronics and communications technology.

Photos of Duan Yongping

Before Duan Yongping was involved in the creation of familiar mobile phone brands, he was personally involved in the production of a popular product in the north and south of China, which is called Subor Famicom Clone.

This is a game console that became popular in China in the 1990s, and like many other unauthorized Famicom Clone, it can run almost any Famicom Game.

The real reason why this console was more popular in the Chinese market in the last century was that it had the appearance of a computer keyboard rather than a game console, and its manufacturer Subor redeveloped the operating system for it, making it look more like an early Windows PC.

In fact, it is called Subor Study Machine (小霸王学习机) in the Chinese market. In an era when there were few personal PC, many Chinese parents bought the Subor Famicom Clone home in the hope of helping their children learn computer knowledge. They didn’t even know it was a game console.

The game console became popular as soon as it was launched. Subor’s sales reached 100 million yuan in 1992 and 1 billion yuan in 1995. The success of Subor is closely related to Duan Yongping.

Move back a little bit. In 1977, China resumed the college entrance examination system.

That year’s college entrance examination was arranged in the winter of the next year. According to statistics, at that time, there were 10 million young people registered for the college entrance examination in China, 5.7 million of whom met the requirements to obtain the examination qualification, while only 272,900 were finally admitted by the University.

Duan is one of the 272,900.

Duan Yongping entered the Radio Engineering Department of Zhejiang University and became the first batch of college students after the Cultural Revolution. After graduation, Duan Yongping was assigned to work at the state-run Beijing Electron Tube Factory, which later became BOE, the display manufacturer.

It wasn’t long before he gave up his position in the state-owned company. At that time, semiconductor integrated circuits were rapidly replacing electronic tubes. Duan was acutely aware of the changes in the industry and finally chose to continue his studies. He was admitted to the Department of Econometrics of Renmin University for further study. He graduated in 1988 with a master’s degree in economics.

The dual academic background of technology and economy laid the foundation for Duan Yongping’s success after that.

In 1988, Duan Yongping came to Guangzhou from Beijing and joined Subor. Subor, which belonged to another state-owned enterprise at that time, suffered a loss of about 2 million yuan due to poor management.

Duan saw the popularity of Famicom in markets such as Europe, the United States and Japan, and had a keen intuition that the game console market in mainland China was about to explode, so he decided to let Subor transform the production of game console products.

Next, there is the Subor Famicom Clone we mentioned above.

Back in 1995, Duan Yongping made a request to Subor’s parent company for shareholding reform, but the request was rejected by the parent company.

This made Duan realize that no matter how good he is, he will always be a professional manager at Subor. So he resigned from Subor and founded BBK.

Foreign consumers may not be familiar with BBK. Its early three major businesses were electronic dictionaries, VCD and cordless phones. 

With Duan Yongping’s management and innovation ability, the three businesses have achieved good results: by 1998, the sales of BBK’s VCD ranked third in the Chinese market, and cordless phones and electronic dictionaries ranked first in the Chinese market.

Among them, BBK Audiovisual Electronics Company, which is mainly engaged in VCD and DVD business, suffered a devastating blow around 2001. 

In that year, with China’s entry into WTO, Sony, Philips, Panasonic and other oversea companies required Chinese VCD and DVD manufacturers to pay patent fees, which led to the closure of all local VCD manufacturers.

As a result, OPPO was born. OPPO did not produce mobile phones at first, but Mp3, Mp4 and HiFi devices.

From entrepreneurs to managers to investors

Around 2002, Duan Yongping has already realized the financial freedom in the eyes of ordinary people.

This year, Duan was just 41, which should have been a golden age for a businessman. However, in order to fulfill his promise with his wife, he emigrated to the United States and no longer participated in the front-line operation of BBK.

Duan and his wife Liu Xin met in 1998 and got married two months later. Liu Xin was the chief reporter of the Palm Beach Post at that time. Duan Yongping promised his wife: “after pushing BBK to a new level, I will meet you in the United States.”

The reason why Duan was able to pull away from his fast-growing company so easily is because of his advanced business management experience.

As mentioned before, as early as the period of Subor, Duan Yongping realized the importance of joint-stock enterprises to the development of enterprises. Duan Yongping founded his own company after a failed request for joint-stock reform of Subor in 1995. 

Therefore, BBK was not a company owned by Duan Yongping alone from the beginning, which was very rare for Chinese companies at that time.

To some extent, when BBK split its business in three different directions into three companies in 1999, Duan had already completed the handover.

In order to prevent capable employees from leaving because they have no sense of belonging to the company, Duan has been using equity incentives in the company.

According to the report, some business management experts once told him that he should use options to motivate employees. But Duan Yongping believes that if it is not a listed company, the option is like a blank check with no practical significance.

At that time, because most employees and even BBK executives did not have enough cash to acquire equity, he even offered to lend money to these people to help them buy shares. These loans are interest-free and do not need to be repaid by employees and will be deducted from future dividends belonging to employee shareholders.

According to reports, at the beginning of the establishment of BBK, Duan owned more than 70 per cent of the company, but by 2017 his share in the companies had fallen to about 19 per cent. The vast majority of the shares are distributed to employees and current executives.

Although Duan no longer directly manage their companies, the several companies still have offices in the company for him. According to previous reports, Duan Yongping now returns to China two or three times a year to “play with” old friends such as Shen Wei, Huang Yihe and Chen Mingyong.

In the early years, Duan came back and severely criticized the management of VIVO. Because he found a no-smoking sign on the wall of a conference room and an ashtray on the table. The contradictory details prove that the company is not in good shape.

Leaving the front line of business management, he experienced a low point in his career. Although he already had a lot of wealth from BBK at that time, Duan Yongping, who was just over 40, was not willing to retire. He began to try to invest in stocks at home in the United States, but many books on stock analysis were to no avail.

In a bookstore, he came across a Warren Edward Buffett book on value investment. The two ideas in the book, “buying shares in a company is tantamount to buying the company” and “investing in companies that you can understand and undervalued by the market,” gave Duan Yongping an epiphany.

He began to learn investment ideas from Buffett, but because Duan is younger and has more technical degrees, he prefers technology and Internet companies to Buffett.

In 2001, under the influence of the bursting of the Internet bubble in the United States, Duan bought 2 million shares of NetEase at a price of $1 per share, because NetEase was one of the most famous websites in China at that time and was still growing at a high speed. Only Duan realized that it was a good company just affected by the concussion of US stocks. 

Two years later, NetEase’s share price rose to $70 a share, giving Duan Yongping a return of more than 50 times his investment.

After the success of the first battle in the investment field, Duan did not stop, he began to bet on UHAL stocks through professional analysis.

UHAL is an American trailer rental company with stores all over the United States and Canada. Failed because of the wrong expansion strategy in 2000, it went into bankruptcy protection in 2003, and the stock price fell from more than $10 to less than $4. But after Duan’s analysis, the company’s net assets alone were worth $50 per share, so Duan Yongping bought 1 million shares of the company for $3.50.

Photo of Duan Yongping and Buffett

A year later, the company was released from bankruptcy protection, and its share price rose sharply, rising all the way to $100 in 2006.

In 2005, Duan Yongping bought Buffett’s lunch for $620100, in which he brought his friend Huang Zheng.

Huang Zheng, another legend among Chinese entrepreneurs, helped NetEase founder Ding Lei solve a long-standing technical problem on MSN as a “netizen” when he was a ungraduate student in 2001. After graduation, he went to the University of Wisconsin for further study and was introduced to Duan Yongping by Ding Lei.

In several important job-hunting and entrepreneurial experiences, Huang Zheng received guidance from Duan Yongping. In 2015, Huang Zheng founded Pinduoduo, an online shopping website. At present, Pinduoduo has become the third largest shopping website after Alibaba and JD.com in China, and has surpassed JD.com in annual sales. Duan Yongping also invested in Pinduoduo at an early stage.

Today, Duan Yongping has faded from the public eye and rarely appears in the media except for public welfare undertakings. Duan Yongping and his wife set up the Family Charity Foundation Enlight Foundation, in the United States, which is mainly responsible for charitable donations in the field of education. They have also registered Xinping Public Welfare Fund in China for education.

His Weibo is also mostly forwarded ads for smartphones of his companies.

A screenshot of Duan Yongping’s Weibo, which has been deleted.

In March 2020, the long-silent Duan Yongping sent a message about investment on his Weibo: 

In these days of panic everywhere, imagine what good companies will look like 10 years from now. I am not afraid of the epidemic at all. It is the same in terms of investment and health. In fact, good opportunities have emerged in the field of investment. 

It is worth noting that Duan Yongping’s post came from a retweet of an analysis of Apple’s financial results.

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