WHY INDIA WANTS CHINESE SMARTPHONE MAKERS TO EXIT Rs.12000 SMARTPHONE MARKET?

WHY INDIA WANTS CHINESE SMARTPHONE MAKERS TO EXIT Rs.12000 SEGMENT?

According to reports, India is developing a plan to pressure Chinese smartphone manufacturers to leave the sub-Rs12,000 market sector and make room for homegrown firms like Lava, Micromax, and Karbonn. While it is crucial that domestic players prosper in the sizable Indian market, forcing Chinese players out of the industry may harm consumer interest since Indian players could not be completely prepared to handle the segment's constantly changing customer needs.

Local businesses like Lava and Micromax have been driven to the periphery over the past seven years as a result of Chinese players' aggressive pricing and lack of supply chain management. Homegrown companies like Lava, Micromax, Intex, and Karbonn collectively accounted for almost 35% of the smartphone industry at their height in 2015. At the time, Micromax and Intex were challenging Samsung, the market leader.

However, since then, Xiaomi, Vivo, Oppo, and eventually Realme have joined the market and have essentially controlled it. Thanks to their strong financial positions and supply networks at home. With brands like Intex and Karbonn totally abandoning the smartphone industry and the others being pushed away, the Indian players were unable to compete.

They may still be unable to meet the demand in the sub-Rs 12,000 sector despite being chosen for the production-linked incentive (PLI) scheme and their claims of enhanced control over the Chinese supply chain.

Chinese companies currently control about 70% of India's smartphone market, as well as 75–80% of sales under $150, as compared to Indian players, who collectively account for less than 1%.

All Indian brandstried to leverage tensions on the border in 2020 and introduced their plans to re-establish the cellphone marketplace, however they couldn't make their presence felt and needed to postpone launches. Only Lava became capable of release 4G and 5G smartphones, however nonetheless struggled with deliver chain-associated challenges.

With 5G industrial release anticipated later this year, the Indian marketplace would require a couple of gamers to meet the call for and to carry down prices for mass adoption, permitting telcos to make returns on their community and spectrum-associated investments.

Notably, Chinese companies like Huawei and ZTE have been left out of India's 5G game after the government urged telecom operators not to consider them for any network-related claims. . India has not officially banned any Chinese suppliers, but has adopted policy measures that make it extremely difficult for Indian telecom operators to source from them.

Therefore, the authorities may choose a similar strategy. However, they must be careful as this decision will have adverse consequences globally and disrupt the level playing field at home.

It is important to note that even Reliance Industries Limited (RIL) faced supply chain disruptions prior to the launch of the Google-developed JioPhone Next 4G smartphone. It is partnering with Chinese companies to come up with service packages that attract new 4G subscribers.

Also in 2022, there are a total of 21 smartphone models launched in the first half (January to June 2022) in this segment. Again, of these, 67% (14) were launched by Transsion's Tecno-led Chinese brands with launches during this period.

While Jio will be looking to roll out an affordable 5G smartphone, it will need to rely on Chinese and Korean companies to accelerate adoption of the service. Bharti Airtel also explained that it has no plans to develop a phone and will rely on a partnership.

According to TechArc, in 2021, out of 58 smartphone models launched in the sub-Rs 12,000 price segment, 34 (59%) are introduced by Chinese brands, led by Realme with 9 smartphone models. illustrative, excluding variations thereof. Compared to this, among Indian brands, Lava has a maximum number of launches of 5 models.

The sub-Rs 12,000 price point has always been a key segment in terms of unit sales, and the lack of a sufficient number of players will inevitably lead to slow progress in penetrating 5G devices, meaning the technology will be limited in adoption at a time when telcos are primarily targeting B2C or consumer use cases to drive growth.

India needs to review investments by Chinese companies in setting up factories, retail facilities and research and development (R&D) centers. Many Chinese brands are actively participating in various leading digital shows and supporting the government's vision. Keeping them away from one of the key smartphone segments could not only hinder the overall growth of the market, currently related to 5G, but could lead to these companies investing less, This will reduce job opportunities.