In spite of anti-China rhetoric, Chinese smartphones dominate Indian market

The cumulative market share of the top four Chinese brands in India, however, declined over the previous quarter (it was 75 per cent in January-March)
Thousands of social media posts, angry protests outside factory gates and dismantled billboards promoting Chinese smartphones have failed to dislodge the leading handset brands in India. In spite of being attacked from all corners, a faltering supply chain and negative sentiments soaring high among the local consumers, top Chinese smartphone brands gained market share during the most critical phase — the April-June quarter of this year. 

According to data from advisory services firm International Data Corporation (IDC), four of the top five brands in the local market continue to be from China and their total market share went up to 66.4 per cent (by volume) during the quarter — from 60.9 per cent in the corresponding quarter last year. Market leader since mid-2017, Xiaomi held on to its first position with 29.4 per cent share. The other three — Vivo (17.5 per cent), Realme (9.8 per cent) and Oppo (9.7 per cent) — stood firm at third, fourth and the fifth positions, respectively.

The cumulative market share of the top four Chinese brands in India, however, declined over the previous quarter (it was 75 per cent in January-March). At the same time, the total share of all Chinese brands together in India fell to 72 per cent in April-June from 81 per cent in the previous quarter. Analysts, however, don’t see a red flag yet. The fall in share is more to do with their failure to feed the demand, rather than the anti-China rhetoric, they say.

According to Navkendar Singh, research director at IDC India, there are no credible alternatives that can replace Chinese smartphone brands in the local market. Superior offerings at competitive prices, the brands’ wide distribution network and millions of satisfied customers over the past four years have placed them on a firm ground that is tough to shake with a few blows.

Shilpi Jain, research analyst at Counterpoint Research, noted that the fall in cumulative share was a result of a range of factors and disruption in supply for some major Chinese brands such as Oppo, Vivo and Realme was one of them. “Local manufacturing, R&D operations, attractive value-for-money offerings and strong channel entrenchment by Chinese brands leave very few options for consumers to choose from. Additionally, in the era of globalisation, it is difficult to label a product based on its country of origin as components are being sourced from many different countries,” she added.

In fact, during the quarter, four out of the top five models — Redmi Note 8A Dual, Note 8, Note 9 Pro, and Redmi 8 — were from market leader Xiaomi, accounting for 21.8 per cent of all smartphones shipped during the period. And despite its factory being closed, resulting in severe stock shortages, Oppo managed to hold on to its position, IDC noted.

Supply disruptions since April did the primary damage, other industry stakeholder indicated. “This year has been challenging and there has been a disruption to the overall supply chain since May. However, we continue to work hard with our suppliers and factories to ensure that we are able to bring adequate quantities for our users and fans of Mi phones this Diwali,” said a spokesperson from Xiaomi India.

According to Raghu Reddy, chief business officer, Xiaomi India, the situation in the market has been improving since July. “We are seeing this growth across all channels. The supply situation also continues to improve over the previous month, which, along with the unserved demand from May and June, has helped in driving higher numbers”, he said. 

Executives and channel partners associated with other leading Chinese brands such as Oppo and OnePlus agree with Reddy. With work-from-home and online education becoming mainstream, consumers now are dependent on smart devices more than ever. And this has led to a spurt in sale of smartphones priced below Rs 12,000. “With the gradual opening up of all markets, Xiaomi is also witnessing higher demand in the Rs 15,000-20,000 and high-end segments,” said Reddy.

In fact, despite protests on the roads and social media platforms, all leading brands launched close to half a dozen new models each during the period. Most firms and industry watchers now believe the worst is behind them. According to Faisal Kawoosa, lead analyst at TechArc, the impact of those protests could never last long.

Further, the quick response that the Chinese firms gave to the crisis has also helped them control the damage. Soon after the first major protest at the gates of Oppo’s plant in Greater Noida, all leading firms brought all hands on deck. From social and digital media campaign teams to communications specialists — every useful resource was alerted and every post or campaign with the potential to intensify the crisis was tracked.

They also initiated awareness campaigns of their own. From retail partners to factory workers, brands like Xiaomi, Vivo, OnePlus and Realme, among others, engaged with stakeholders. “The idea was to send across the message assertively that we are more of an Indian company than Chinese. Over 90 per cent of our employees and 100 per cent of our retailers are Indian, majority of our sourcing partners are from India, and we have made significant investments in India to set up our manufacturing and R&D bases,” said a senior executive of a prominent Chinese firm.

According to brand consultant Harish Bijoor, founder of Harish Bijoor Consults, Chinese brands adopted a wait-and-watch approach. “They needed to sit out the crisis. Given the lack of alternatives in categories like smartphones, firms will remain insulated from such onslaught,” he said.

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