India is threatening the made-in-China industry

Samsung’s new plant in India is the largest smartphone factory in the world.

The following article is an adapted translation of this article, written by Wang Xinxi and published by Sina Tech.

The signs of a shift are everywhere. China, the world’s mobile phone manufacturing hub, is swiftly losing ground to India.

Consider: Not long ago, Samsung built a new mobile phone manufacturing plant in Noida, India. It’s Samsung’s second factory in the country, and is slated to become the world’s largest such plant, producing a whopping 120 million mobile phones per year.

Prior to that, Samsung had invested quite a bit in the Chinese manufacturing market. But as domestic economic growth slows, Samsung’s strategic vision has pivoted toward India.

Apple, Foxconn, and a host of other domestic mobile phone manufacturers have also invested in India-based manufacturing over the past couple of years. For example, last year, Apple began manufacturing some iPhones in India, and approached the Indian government about tax breaks to facilitate its suppliers manufacturing phones there.

And the list goes on. Acer’s spin-off manufacturing arm Wistron and Foxconn have both announced agreements with Indian government officials to rent land for local manufacturing purposes.

It’s not just the global players that are moving away. Virtually all of China’s phone manufacturers have established manufacturing in India. Vivo, Oppo, Xiaomi, and more all have factories there. Xiaomi, in fact, already has two, and earlier this year announced plans to open a third.

Vivo’s new 30,000 square meter manufacturing plant in India is its largest outside of China.

Even component makers like chipmaker Mediatek have announced plans to slow manufacturing programs in China as they shift toward India and other Southeast Asian locales.

One of the reasons for this is simple saturation; manufacturing growth and smartphone sales in China are slowing, while the comparatively unsaturated Indian market is heating up. With smartphone penetration in India is still only 30 percent, some phone manufacturers see the soon-to-be massive market as crucial to their future success and want to set up there before their competitors do.

Another reason: India’s government has incentivized local production through a variety of policies, including raising import duties on critical parts to make direct investment in India more financially compelling to manufacturers.

The biggest reason, of course, is money. Rent, equipment, and labor costs are all typically lower in India than China, meaning that manufacturers can produce phones more affordably there. And with costs in China being driven continuously upward by rising living standards even as local demand for smartphones slows, Chinese phone makers are finding themselves in a position where they need to make phones more cheaply even as all of their costs are rising.

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