Indian phone companies call for help as rivalry picks up

Mr P. Sanjeev, vice-president of sales for Huawei India's consumer group, and Ms Shalini Puchalapalli, director of category leadership at Amazon, with Huawei's new Honor 8 Pro smartphone in New Delhi.
Mr P. Sanjeev, vice-president of sales for Huawei India's consumer group, and Ms Shalini Puchalapalli, director of category leadership at Amazon, with Huawei's new Honor 8 Pro smartphone in New Delhi.PHOTO: AGENCE FRANCE-PRESSE

With half the local market cornered by Chinese firms, they seek protectionist policies

Chinese smartphone companies have swept into India with aggressive marketing that targets the Indians' love for selfies and 4G phones, leaving local firms to play catch-up in the world's fastest growing mobile phone market.

In the first quarter (January to April) of the year, Chinese firms such as Xiaomi, Vivo, Lenovo and Oppo cornered a 51.4 per cent share of the smartphone market, compared with a 16.9 per cent share for the same period last year, said International Data Corporation (IDC).

In contrast, top Indian phone-makers such as Intex Technologies and Micromax have seen their share fall to 13.5 per cent from 40.5 per cent for the same quarter last year.

Now, they are looking to the government to help them out.

Mr Rajeev Jain, chief financial officer of Intex Technologies, said the government should look at imposing anti-dumping duties on Chinese phones for a start.

"It is not a level playing field for us. We are an industry of the last 10 years; they are a mature industry. They get export incentive and advertisement support from their government. Unless duty protection is given to us, it is very difficult for us to compete in the Indian market,'' said Mr Jain.

"The cash burn (on marketing) they are doing in the Indian market to promote their brand... that has to be considered while giving protection to the Indian industry. Everyone is protecting their industry, whether in the United States or Europe.''

The government, focused on bringing in foreign investment, is unlikely to turn protectionist. Still, Indian phone-makers are not seeking higher duties on components such as LED screens - which Indian firms source from China - just for Chinese phones.

India overtook the US for second place behind China with a smartphone user base of over 300 million. More are expected to switch to smartphones as the market gets a boost from the ongoing roll-out of 4G services and increased Internet coverage.

Chinese firms, facing saturation in their domestic market, are going strong, unrolling more 4G phones with a variety of attractions such as bigger storage space and display screens, as well as selfie features.

"These (Chinese) brands anticipated the market trends much better than their competitors, including the growth of LTE (long-term evolution) devices, fingerprint sensors and selfie-focused (features)," said analyst Parv Sharma from Counterpoint Research. "As a result, they were able to market themselves as a leader in key categories, such as Oppo with its 'Selfie Expert'."

Chinese firms have even roped in Bollywood stars such as Deepika Padukone and sports celebrities such as Indian cricket captain Virat Kohli as brand ambassadors.

Actress Alia Bhatt can be seen on billboards taking a selfie with a Gionee phone while in March, Oppo won sponsorship rights for the Indian cricket team in a country where cricket is the top sport.

Indian firms, many of which have been concentrating on lower-end smartphones, said it was tough competing against such deep marketing budgets and pricing. Smartphones, both Indian and Chinese, can start from below 2,000 rupees (S$42.70).

"The aggressive brand strategy of the Chinese players, by offering higher channel margins to the distributors and the end sellers, has been an important factor in disrupting the smartphone market,'' said Mr Shashin Devsare, executive director of Karbonn Mobiles. "We hope the government does something. Otherwise, it's a loss for the industry and the government."

Experts said Indian phone-makers would not be able to reverse the trend any time soon with normally price-conscious Indian consumers not averse to spending a little more on phones with better features. The average price of a smartphone rose from US$131 (S$181) in the first quarter of last year to US$155 for the same period this year, said IDC.

Mr Sharma said Indian manufacturers could take steps such as bundling phones with telecommunications operators, focusing on the middle-segment 4G smartphones and even looking at foreign markets.

Mr Navkendar Singh, head of Mobile Devices Research India & South Asia at IDC, said the Indian markets could "handle several players if right product mix and value is offered to the Indian consumers".

"All the major India-based vendors face and shall continue facing challenges... since China-based brands have established themselves as a real option for a smartphone consumer looking for a great-quality device, with the latest specs and technology, but doesn't mind spending a little extra," he said.

Mr Venkatesh Marepally, 46, is one such consumer. The graphic design firm owner recently bought a Xiaomi phone. He used to own phones by South Korean tech giant Samsung and Indian firm Mircomax. "I read a lot of reviews and finally bought this (Xiaomi) because it has more features, such as front and back cameras, and a 16GB Internet camera," he said.

A version of this article appeared in the print edition of The Straits Times on July 17, 2017, with the headline 'Indian phone companies call for help as rivalry picks up'. Print Edition | Subscribe