Banning Chinese phone brands may not revive local trade


August 9, 2022

A ban on cheap Chinese phones could prove to be a huge setback for brands such as Xiaomi, Realme and Transsion Holdings, which owns Tecno, Itel and Infinix brands, even as analysts have pointed out that Indian companies do not not have the scale to fill the hole.

Bloomberg News reported on Monday that India is seeking to block Chinese firms from selling handsets below ₹12,000 to boost its ailing domestic industry.

“Chinese OEMs sell over 80% of all phones below this price,” said Tarun Pathak, research director at Counterpoint Research. “Realme and Xiaomi account for 50% of smartphones in this segment,” he added.

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Although this particular segment is no longer growing due to lower consumer demand, it still accounts for 40% of smartphones shipped in India, according to Navkendar Singh, associate vice president for device research at IDC India, South Asia & ANZ.

According to IDC’s quarterly report released on Monday, demand for smartphones in India is shrinking due to rising inflation and rising input costs, leading to high retail prices. The Average Selling Price (ASP) of smartphones hit a new high of $213 (~₹16,957) in the June (Q2) quarter of 2022. Most Chinese brands performed well, although some of the between them are under the government scanner for alleged money laundering. money and duty evasion.

According to Bloomberg, the ban is trying to revive nascent domestic brands that account for just 1% of smartphones sold in India. “In this segment, Samsung has around 15% market share for devices priced below ₹12,000 – and Indian OEMs account for around 4-5% of that,” Pathak said.

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Pathak warned that in the event of an outright ban, Indian brands would not be able to fill this market gap in the short term. IDC’s Singh agreed that existing Indian handset makers lack the ability to fill such a market gap if such a ban is immediately enforced. However, he thinks such a move could bring new Indian companies into the smartphone space. “But they will need massive support from the government, including financial support,” he added.

Although most Indian brands have a limited presence, they haven’t given up on smartphones. Lava and Micromax have launched several new smartphones in the budget segment since mid-2020 after the Indochinese border dispute led to calls for a boycott of Chinese brands.

After the recent crackdown on Chinese brands, Indian OEMs including Lava and Micromax tried to make the most of the situation by “increasing their marketing efforts” at offline outlets, said Manish Khatri, partner of the Mahesh Telecom distribution chain. Khatri, however, added that Indian brands do not have the scale of Chinese brands in terms of shipments, although consumers are not averse to buying their products.

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Many industry players believe that it is impossible to ban Chinese brands from selling devices to promote local brands. An industry expert said on condition of anonymity that there was no way the government could ban Chinese brands from selling phones of a certain value. Even in the case of Huawei and ZTE, the two companies have never been banned. They have just created a trusted list, and the responsibility lies with the telecom operators. If Huawei and ZTE can clear these rules, they can sell,” he added.

“How are you going to do this for smartphones? he asked and replied that in phones, the semi-disassembled units come from China and are assembled here. “How are you going to determine what is Chinese? »

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