Chinese handset makers turn to India for growth

July 25, 2014 08:39 pm | Updated November 16, 2021 07:16 pm IST - New Delhi

When the Xiaomi sold out its first batch of devices within half an hour of going of sale earlier this week; it revealed the growing Indian appetite for Chinese smartphones. For their part, Chinese handset makers are raring to woo first time smartphone buyers and fuel growth as their home market nears saturation point.

Presently, there are over half-a-dozen Chinese brands that have operations in India, including Huawei, ZTE, Lenovo and newer players such as Xiaomi, Gionee and Oppo.

“We foresee tremendous opportunities in the Indian smartphone market,” ZTE India CEO for Terminals (including smartphones and data cards) Yuan Kang said. Citing report, he added that smartphone sales in India are increasing at a tremendous rate, making it the world’s fastest growing smartphone market in the last quarter of 2013.

“We also believe that the next growth wave for the smartphone lies in the upcountry Indian market. We have a definite strategy to reach out to the upcountry market through our innovative portfolio. The country holds great promise for us,” he added.

ZTE is the OEM (Original Equipment Manufacturer) for various telecom operators in the country, including Airtel, TATA and Reliance.

Other manufacturers agree that India presents a huge growth opportunity for them.

“It is well-known that the Indian smartphone market is one of the fastest growing markets in the world,” Oppo Mobiles India CEO Tom Lu said.

According to the latest report by Canalys, India has now become the third-largest smartphone market after China and the US in terms of smartphone shipment, he said. “This clearly validates that Indian market is definitely booming and there is a lot of potential to grow. In our global expansion, India is no doubt one of the key strategic markets,” Tom Lu added.

Meanwhile, Arvind Vohra, India Head for Gionee Smartphones believes that India market for them is as important as the China market. “In fact, more than China because we believe India could prove to be a bigger growth story for Gionee than China,” he said.

Talking about the trend, Anshul Gupta, Principal Research Analyst at Gartner explained, “These brands are now turning to India for growth as Chinese market is almost saturated in terms of smartphone growth. About 80 per cent of there mobile phone sales are already coming from smartphones, as compare to 25-30 per cent in India. In China, the growth opportunities now are limited.”

In 2013, a total of 435.76 million mobile phones were sold in China, of which 330.77 were smartphones. The sales figure was India during the same year stood at 241.17 million, of which only 37 million were smartphones, as per Gartner.

For most of these vendors, the primary targets are the first time buyers in cities as well as semi-urban regions of the country.

These Chinese makers, some of which used to be vendors for Indian handset companies, are mainly competing with domestic handset makers such as Micromax, Karbonn, Lava and Intex, among others, to grab a pie of nearly 70 per cent of mobile phone sales in the country that still comes from feature phones.

One of the major reasons for migration to smartphones, according to experts, is increase in cheaper variants of smartphones, which is what the domestic brands as well as the Chinese brands are better known for.

These brands compete more aggressively on price and are generous on features and their success has got even high-end manufacturers feeling the pressure.

“This is not a very new trend. Some of the Chinese brands have been present in India for sometime now. Additionally, majority of the brands are manufactured in China. So, these companies have been manufacturing for a while and have an idea about what will sell in India. If good options are available people will buy. This will have some impact on the domestic companies,” Jaideep Ghosh, Partner, KPMG in India said.

On the other hand, Mr. Gupta said while Indian brands will be under pressure to retain their market share and will need to differentiate themselves. They do have an advantage of being in the market for a while and understanding it well, besides have a well established distribution channel in the country.

“The smartphone market in India is huge and the new players would be trying to experiment in these markets…We welcome competition and are well poised to repeat our success in India,” Anand Narang, Director–Marketing at Huawei India Consumer Business said.

Talking about competition, Oppo’s Tom Lu said, “Competition mostly is not a bad thing. For customers, certainly they will have more choices and can get better products. For brand owners, competition brings insights and drives the brands to perfection. I think the growing competition in India market, either from MNCs or domestic players would be a performance driving factor in the long run.”

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