India to oust Chinese phone brands from local markets – Asia Times
JAIPUR — India will likely soon block Chinese smartphone makers from selling products in lower-tier local markets, a move that will aim to support and protect competing Indian makers while applying more regulatory pressure on big Chinese producers. such as Xiaomi Corp, OPPO and Vivo.
The move, which is yet to be officially announced but reported in Bloomberg and local media citing unnamed sources, will seek to oust Chinese smartphone brands such as Transsion and Realme from segments priced at 12,000 rupees ($150) or less. expensive market, currently the second largest in the world.
These Chinese brands have recently taken market share from local producers such as Micromax, Lava and Karbonn, which dominated lower-tier markets just a few years ago, but have recently lost significant market share to Chinese cheap brands.
The planned new market restrictions will coincide with ongoing tax evasion investigations into OPPO, Vivo and Xiaomi, including for allegedly failing to pay full import duties on parts and components used to manufacture phones sold on Indian markets.
The protectionist movement, once implemented, promises to complicate the wider bilateral trade relationship at a time of strong growth. China-India trade is on course to cross the $100 billion mark for the second consecutive year, rising $67.1 billion in the first half of this year, according to Chinese state media.
The Global Times, run by the Communist Party of China, notes that out of 382 foreign direct investment (FDI) proposals received by the Indian government from Chinese companies in June this year, India approved none. than 80. environment faced by Chinese investment and companies doing business in India.
Ajay Sharma, a smartphone industry veteran with more than 15 years of experience in the market, told Asia Times that the move was aimed at supporting India’s increasingly depressed smartphone brands.
“If that [government move] is indeed true, it would be a blow to brands like Transsion, Realme and Xiaomi, which are heavily dependent on India for their growth,” he said.
He said smartphones of 12,000 rupees and below accounted for 33% of the total local market sales volume in the second quarter of this year, of which Chinese companies took 80% of the market share.
Sharma said the government should be delicate in how it announces new restrictions. “There is no official communication on this at the moment and how will this be conveyed is a big question,” he said.
“Will it die out like the news in October 2021 of replacing Chinese distributors of some Chinese brands with Indian distributors?” He asked.
Otherwise, China could be left out of a growing market. According to Maximize Market Research, which provides tailored and tailored business and market analysis, the total Indian smartphone market was estimated at 173 million units in 2020.
It estimates that total revenue is expected to grow at a compound annual growth rate (CAGR) of 14% from 2021 to 2027, with the market reaching 432.89 million units per year in 2027.
Counterpoint, a global industry analytics firm, estimates that Indian smartphone market revenue topped $38 billion in 2021 while recording 27% year-over-year growth.
Faisal Kawoosa, founder and chief analyst of Techarc, a new-age technology market research firm, believes that the sub-12,000 rupees and especially the sub-6,000 rupees segment is shrinking year on year. .
Kawoosa said it was still one of the most critical market segments with more than 200 million people and most of the country’s first-time buyers buying in this price range.
“It will not be in the interest of customers who are just sitting at the doorstep of smartphones if supply is restricted or impeded in any way,” he said, referring to new restrictions planned for consumers. Chinese phone manufacturers.
The participation of non-local brands is just as important as that of local brands because it keeps the market competitive and prices aggressive, Kawoosa said.
He noted that “our local brands depend on Chinese suppliers for components. If we restrict Chinese smartphone makers to this segment, it could be counterproductive for local brands and they could face a hostile supply chain.
Market insiders say local mobile phone makers recently held closed meetings over the issue of restricting Chinese brands in New Delhi.
India-based news agency IANS reported that the Indian government has recently taken a tough stance against Chinese manufacturers, as evidenced by recent raids on Chinese smartphone companies like OPPO, Vivo and Xiaomi over tax and other issues. .
The IANS report states that OPPO, Xiaomi and Vivo have all received notices from the Directorate of Tax Intelligence (DRI) for import duty evasion, citing Finance Minister Nirmala Sitharaman’s statement to Parliament last week .
“A show cause notice has been served on OPPO Mobiles India Ltd based on an investigation by DRI, while five customs duty evasion cases have been registered against Xiaomi Technology India,” Sitharaman said in a statement. written statement.
These moves were not well received in Beijing. The Global Times suggested in a recent commentary that a crackdown on Chinese companies would reduce India’s overall attractiveness for foreign investment.
The report states: “The frequent investigations by the Indian side on Chinese companies not only disrupt the normal business activities of these companies, but also hamper the improvement of the business environment in India and dampen the confidence and the will of the Market entities, especially Chinese companies, invest and operate in India.
Indo-China relations have reached a new nadir after deadly border clashes in the Galwan Valley along their disputed Himalayan border in June 2020.
Soon after, netizens launched a #BoycottChineseProducts campaign which gained strong traction online. Prime Minister Narendra Modi’s government subsequently banned more than 260 Chinese apps and platforms, including the popular TikTok, Shien and CamScanner.