Chinese smartphones are killing India’s brands

Photo credit: ocipalla / 123RF Stock Photo

Chinese mobile phone brands are booming in India, for the first time ever making up more than half – 51 percent – of new devices in the world’s second largest smartphone market.

Meanwhile, Indian brands dropped below 20 percent market share of shipments in November, according to Counterpoint Research, plummeting from 40 percent in early 2016.

Local brands have been facing increasingly stiff competition from Chinese brands that are affordable.

Counterpoint research analyst Karn Chauhan says most Chinese brands are in the US$75-200 price segment. As per market share data for the September quarter, Xiaomi has pushed out local players and now dominates this segment, along with Samsung. Those budget phones have seen a growth of over 45 percent in the past year.

The biggest gainers were China’s Vivo and Gionee, making mid-range – US$250-450 – phones, a segment that soared by over 150 percent.

Volatile market and fickle shoppers

Micromax and Intex suffered as they cater to sub-US$90 price range phones, where sales were flat at the end of September.

Karn feels the tide has changed in favor of Chinese brands in just a couple of months. “This shows volatility of the Indian smartphone market, and next year, there will be significant pressure on Samsung to protect its market share from the onslaught of these Chinese brands,” he explains.

Smartphone shipments in India hit a record 35 million in the September quarter due to increased demand from retailers readying for the festive season. Chinese brands such as Lenovo, Xiaomi, Vivo, and Oppo collectively cornered 32 percent of the smartphone market.

Chinese brands are poised to rocket to 60 percent share.

Xiaomi in October said it sold more than 1 million smartphones in India in the first 18 days of the month. In the whole of 2016, the Chinese company claims to have crossed US$1 billion in revenue. Xiaomi was launched in India in July 2014.

They’ve also been riding India’s online shopping boom. Late entrants Xiaomi, OnePlus, and Le Eco have taken the online route to dethroning local players with lots of stores and sellers. Most Chinese brands launched their flagship models exclusively on ecommerce platforms.

Lenovo and Xiaomi also targeted Diwali by pushing up online sales, while other brands including Oppo, Vivo, and Gionee strengthened their offline presence.

Indian brands, however, failed to refresh their portfolio in the mid-price segment. Major Indian brands focusing on entry-level smartphones in semi-urban and rural areas were also hit by the cash crunch from demonetization, Karn says.