They Are Not Undercutting You. They Are Out-Premiuming You.
DJI, Insta360, Anker and BYD did not take Western categories on price. They took the top of the price ladder and pushed the incumbents down into commodity territory. Almost every Western defence plan is built for the opposite direction.
Annie Chan··14 min read
GoPro's own 2025 results, published in early 2026, report full-year revenue of 651.5 million dollars against 801.5 million a year earlier, roughly 2 million cameras shipped, down about 20 percent, gross margin of 33.6 percent, an operating loss of 83.3 million dollars, a net loss of 93.5 million, and a year-end cash position of 49.7 million against 102.8 million twelve months before.
The reflexive explanation for a decline like that is price pressure from cheap Chinese competition. It is the explanation most boards will accept without asking a second question, and in this case it is factually wrong. The companies that took the action camera category, DJI and Insta360, do not sell cheap cameras. Their flagship products are priced at or above the incumbent's, and they win the comparison anyway.
The competitive threat from Chinese hardware is not a low-cost threat. It is a high-end threat wearing a low-cost reputation, and the reputation is what lets it arrive undefended.
This matters because the two threats require opposite responses. A low-cost attack is answered with cost programmes, value tiers and supply chain work. A high-end attack is answered with product investment and a defensible reason to charge more. Incumbents that misdiagnose spend two years running the first playbook against the second problem, then discover they have cut cost out of the exact places that would have justified their price.
Four companies, one direction of travel
Set the numbers out plainly, with sources, because the profile that emerges is not the profile in most Western competitive decks.
Insta360
Arashi Vision, which sells under the Insta360 brand, listed on Shanghai's STAR Market on June 11, 2025 at an issue price of 47.27 yuan per share and opened up around 285 percent, taking market capitalisation above 70 billion yuan. In a July 2026 Forbes interview, co-founder Max Richter described sales growth of 74 percent to 1.4 billion dollars, with international revenue above 60 percent of the total. PitchBook shows trailing twelve month revenue of about 1.53 billion dollars as of March 31, 2026.
So a company that did not exist before 2015 is now generating more than twice the revenue of the category's founding incumbent, with the majority of it outside its home market, while the incumbent's revenue falls.
Anker
Anker Innovations reported 2025 revenue of 30.51 billion yuan, up 23.49 percent, with net profit attributable to shareholders of 2.55 billion yuan, up 20.37 percent. Overseas markets produced 29.482 billion yuan, or 96.62 percent of revenue. North America alone was 14.13 billion yuan, 46.31 percent of the total. Europe was 8.15 billion yuan, 26.71 percent, growing 43.48 percent. Research and development spending was 2.89 billion yuan, 9.48 percent of revenue.
Look at the last figure again. A Chinese consumer electronics accessories company is spending nearly a tenth of revenue on research and development, and collecting 96.62 percent of its revenue outside China. That is not the cost structure or the market posture of a copier.
DJI
DJI's market share is the number most often quoted and least often qualified. Published estimates for 2025 range from around 70 percent of the global civilian drone market, described as down from 74 percent in 2024, up to 83.48 percent of worldwide drone detections. Those measure different things: revenue share, unit share and detection share are three different denominators, and detection counts operational flights rather than sales. Anyone quoting a single precise DJI share figure without naming the methodology is passing along a number they have not interrogated. The safe statement is that DJI's dominance of consumer drones is overwhelming by every published methodology, and the exact figure is contested.
BYD
BYD reported 2025 new energy vehicle sales of 4,602,436 units, including record battery electric passenger vehicle sales of 2,256,714. Exports reached 1,046,083 NEVs, growth of 150.74 percent. Its premium sub-brands, Yangwang, Denza and Fang Cheng Bao, together sold close to 400,000 vehicles in 2025, and those brands remain largely China-only, though Denza has begun launching in European and Australian markets.
The premium sub-brand structure is the tell. A company competing purely on cost does not build three separate marques above its main line. BYD built them because its domestic price war had compressed margins at the bottom of the ladder, and the only escape from a price war is upward.
The mental model that is costing you money
The persistent Western frame is a ladder with Western brands at the top on quality and design, Chinese competitors at the bottom on price, and a gap between them that narrows over time as the Chinese firms improve. The strategic implication of that frame is that you defend by staying ahead: keep innovating, keep the gap open, accept share loss at the bottom.
In these four categories that is not what happened. The Chinese firm did not climb the ladder from the bottom. It arrived near the top, took the flagship position, and left the incumbent holding the middle and lower tiers, where margins are thin and the next entrant is already arriving.
"Being commoditised from above is a different injury from being undercut from below, and it is worse, because the tier you are pushed into is the tier with no pricing power and the most competitors."
The mechanism is not mysterious. In categories where the product's performance is legible, meaning a buyer can read a spec sheet, watch a comparison video, and see the difference in an hour, the top of the ladder belongs to whoever ships the best product this year. It is not a position that can be held by heritage. Chinese firms in these categories iterate on a shorter cycle, often shipping meaningful hardware revisions annually where Western incumbents ship on a two to three year cadence, and in a legible-performance category the shorter cycle simply wins on the merits.
The same information dynamics that reshaped domestic Chinese categories are now operating in Western ones. The guo chao piece covers how cheap verification dissolved the foreign premium inside China. The identical mechanism, comparison content plus fast shipping plus a competent challenger, is running against Western incumbents in their home markets.
Where a premium can actually live
If you are going to defend a price, you need to know what specifically the customer is paying for. There are only three answers that survive contact with a competitor, and they behave very differently.
The performance premium
You charge more because the product measurably does more. This is the premium most Western hardware brands believe they hold and the one that erodes fastest, because it is the one the challenger is directly attacking and the one a reviewer can disprove in a weekend. A performance premium has to be re-earned with every product cycle, which means it is only as durable as your research spending relative to the challenger's. Anker at 9.48 percent of revenue is a useful benchmark to hold your own figure against.
The access premium
You charge more because the customer cannot easily buy the alternative. Regulatory approval, certification regimes, distributor networks, installed base and switching costs, professional channel relationships, procurement whitelists. This premium is real, often large, and frequently mistaken for brand strength by the company collecting it.
The taste premium
You charge more because the customer wants to be the kind of person who owns your thing. Slowest to build, slowest to erode, and almost impossible to manufacture deliberately in a category where performance is legible. Very few hardware brands actually have one. Most that believe they do are collecting an access premium and calling it taste.
The single most useful exercise a hardware brand can run this quarter: take your flagship SKU, take the leading Chinese competitor's flagship, put the two spec sheets side by side with the logos removed, and write one sentence explaining what the price difference buys. Then classify that sentence as performance, access or taste. Teams routinely cannot complete this exercise, and the inability is the finding.
DJI and the honest lesson about access premiums
The clearest available demonstration that access and brand are different things is what happened in the US drone market in December 2025.
On December 22 and 23, 2025, the FCC added foreign-made unmanned aircraft systems and certain critical components to its Covered List, following a security review mandated under the National Defense Authorization Act with a deadline of December 23, 2025. The practical effect is that covered equipment cannot receive new FCC equipment authorisations, which blocks new DJI and Autel models from normal US import and sale. Previously authorised models remain legal to import, sell and fly, and existing drones were not grounded.
Read what that says about the preceding decade. DJI's position in the United States was not eroded by a superior American drone. It was capped by a regulatory action. Whatever premium American drone makers had been able to charge in that period was, to a substantial degree, an access premium that a policy decision had granted and could equally have withheld.
Three things follow for anyone holding an access premium in any category.
Know that you hold one and say so internally. An access premium recorded in the plan as brand equity produces bad investment decisions, because you will fund advertising when you should be funding product or lobbying.
Access premiums make companies slow. If the competitor cannot legally reach your customer, you have no forcing function on your own product cycle, and the gap you accumulate becomes visible the moment access opens.
Access is granted by third parties and can be revoked by them, sometimes in a single quarter, and often for reasons entirely unrelated to your commercial performance.
There is a version of the next few years in which several Western hardware categories discover that their share was mostly a policy artefact, at exactly the moment the policy changes. The companies that survive that discovery are the ones that used the protected period to build something else.
The pricing move: stop defending the middle
The default response to a strong new competitor is to hold the line in the centre of the range, where the volume is. In a legible-performance category, the centre is the worst place to stand.
The centre is where spec-for-spec comparison is easiest, where the buyer is most price-aware, where your margin is thinnest, and where the challenger will land because it is the largest addressable pool. Defending it means competing on the challenger's chosen ground with a worse cost base and a slower product cycle.
The two defensible positions are the ends.
At the top: build a flagship that genuinely wins the comparison, price it above the challenger's flagship rather than below it, and accept lower volume. This requires real product investment and is the only route that rebuilds a performance premium. It also requires the marketing organisation to stop describing the product in terms the challenger's spec sheet can answer.
At the bottom: compete deliberately on total cost of ownership rather than sticker price, using service, warranty, fleet management, trade-in and financing, which are areas where an incumbent's infrastructure is an actual advantage and where a challenger's shipping-from-overseas model is genuinely weaker.
In the middle: harvest it. Manage it for cash, do not defend it with marketing spend, and be honest in the plan that it is a declining position rather than the core of the business.
Most incumbent plans do the exact opposite: they under-invest in the flagship because its volume is small, over-invest in defending the middle because that is where the revenue is, and neglect the service proposition because it sits in a different P&L.
The one advantage incumbents genuinely have, and mostly waste
The Anker results contain a second story that most coverage skipped. Alongside record revenue, net operating cash flow fell by 82.49 percent, driven by an inventory increase of more than 54 percent, and the company undertook a recall covering more than 2.38 million products.
That is a real, specific vulnerability class for fast-scaling Chinese hardware firms operating far from their manufacturing base: inventory risk, working capital strain, and after-sales exposure across many jurisdictions. A recall of that scale is an operational stress test, and running it from a different continent with a distributed channel is materially harder than running it with a domestic service network and long-standing retailer relationships.
Western incumbents in these categories generally do have the better service infrastructure, the deeper regulatory relationships, the established returns and repair flows, and the customer trust that comes from having been reachable for twenty years. They also, almost universally, treat all of that as a cost centre to be minimised rather than a differentiator to be sold.
"If your only durable advantage over a faster competitor is that you can be reached, repaired and relied upon, then reachability is your product and should be priced and marketed as such. Most incumbents outsource it to the lowest bidder."
Frequently asked questions
Are Chinese hardware brands actually cheaper?
Increasingly not at the flagship tier. DJI and Insta360 flagship products are priced at or above their Western equivalents, Anker's premium charging and energy storage products carry a clear premium over commodity alternatives, and BYD built three separate premium marques specifically to escape domestic price competition. Cheap Chinese entrants still exist, but they are no longer the competitive threat that reshapes a category.
What is the market share of DJI in consumer drones?
Estimates range from about 70 percent of the global civilian drone market to over 83 percent of worldwide drone detections, depending on whether the measure is revenue, units or observed flights. Those methodologies are not comparable and the sources disagree meaningfully. The defensible statement is that DJI's dominance is overwhelming under every published methodology and that any single quoted percentage should be treated as methodology-dependent.
What happened to GoPro?
GoPro's own reported 2025 results show revenue of 651.5 million dollars against 801.5 million in 2024, camera units down about 20 percent to roughly 2 million, an operating loss of 83.3 million dollars and year-end cash of 49.7 million. The company attributed the decline to product launch timing and mix, a softer global consumer market, and share loss to an increasingly competitive global landscape. The competitors that took the share were not competing primarily on price.
Does the FCC action on drones protect US manufacturers?
It restricts new equipment authorisations for covered foreign-made drones and components, which blocks new DJI and Autel models from normal US import and sale, while leaving previously authorised models and existing fleets in place. It is protection of access rather than a competitive win on product, and access protection tends to reduce the pressure on the protected firms to improve, which is a risk to them rather than a gift.
How should we reprice against a Chinese premium competitor?
Locate your premium first. Classify it as performance, access or taste, and state it in one sentence a customer could verify. If it is performance, the answer is product investment and a flagship priced above theirs. If it is access, the answer is to use the protected window to build something durable, and to model what happens when access opens. If you cannot classify it, you are pricing on inertia and the right move is to plan for the middle of your range to erode.
The exercise for your next pricing review
Bring three documents. Your flagship spec sheet. The leading Chinese competitor's flagship spec sheet. And a single page naming, in order of contribution, the components of the price difference between them.
If that page is mostly performance claims, verify each one against a third-party comparison from the last six months, because your internal belief about relative performance is frequently two product cycles out of date.
If that page is mostly access, put a date on it. When does the certification, the channel exclusivity, the procurement whitelist or the policy protection expire or become contestable? That date is your real planning horizon, not the fiscal year.
And if the page is mostly adjectives, you have found the problem. The competitor's page is not going to be mostly adjectives.
For the wider question of whether your category is in the phase where Chinese competitors are consolidating at home or already exporting into your market, the China market entry strategy framework sets out the four stages and what each one implies.
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Ex-Transsion Global Digital Marketing Director · Effie Awards Greater China jury member · Guest lecturer, Peking University School of Economics · Writes Annie Chan Talk, your insider lens on China.
