Can India's smartphone makers challenge the Chinese?

In the aftermath of border clashes between India and China, recent retaliatory moves by India's government look set to hinder Chinese smartphone vendors like Oppo, Vivo and Xiaomi.

The Chinese smartphone brands have a major presence in India and a market share of about 80%, according to Counterpoint, based on figures in the first quarter. Offering advanced features, many Chinese devices sell for less than $200 apiece, making them a popular choice for users with less disposable income.

According to market-research firm IDC, around 76% of the 32.5 million smartphones shipped to India in the March-ending quarter belonged to Chinese smartphone brands. Four of the top smartphone brands in India are Chinese, says IDC.

India's government has already banned 59 Chinese apps and barred state-owned service providers BSNL and MTNL from using Chinese network equipment. Authorities have also mandated the full inspection of any shipments that arrive from China.

Other players, including Apple and Samsung, are now likely to gain at the expense of Chinese brands. Indian brands such as Lava may also benefit as the country tries to be self-reliant and promote the use of domestic products and services.

In a bid to capture market share from Chinese firms, Samsung recently launched four new handsets in the 10,000 Indian rupees ($133) to INR20,000 ($267) range, where the Chinese brands are particularly strong. Micromax, an Indian brand that has been losing market share in recent years, sees anti-China sentiment as opportunity for a comeback.

Yet there are limited alternatives to Chinese brands. Indian firms may also struggle to match Chinese vendors on price.

Moreover, restricting the supply of components from China will affect Indian smartphone makers as well as Chinese ones. India's move to impose checks on all imports from China will hold up deliveries needed for smartphone production.

The Indian Cellular and Electronics Association (ICEA) has already earlier written to the government to request an exemption from these rules. The industry says productivity has taken a INR400 billion ($5.31 billion) hit in the last three months because of the coronavirus pandemic.

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The resulting lockdown and related factors are having a nasty effect on smartphone production. After resuming smartphone production in May, Oppo was forced into another shutdown when a few positive coronavirus cases were detected at its facility. It has started to import finished products in response.

Smartphone manufacturing is also facing problems because of a labor shortage: after losing their livelihoods during the lockdown, thousands of laborers and daily wage earners decided to return to their villages.

While the anti-China sentiment might boost other brands in the short term, Indian brands will find it hard to sustain interest unless they can provide competitively priced and differentiated products that guarantee a high-quality user experience.

— Gagandeep Kaur, contributing editor, special to Light Reading

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