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Can India Ever Beat China in Smartphone Manufacturing?

There was a time not too long when “Chinese phones” carried a certain stigma among the Indian consumers. It was often used as a disparaging term to describe cheap knock-offs, with phones being designed and manufactured using cheap materials, and were offered at dirt-cheap prices. However, today, that sentiment has taken a 180-degree turn, with Chinese smartphone brands offering feature-rich phones at affordable prices. Brands like Xiaomi, Realme, Vivo, OPPO and OnePlus have largely been successful in transforming the smartphone landscape, particularly in India.

India’s burgeoning middle class, along with the propensity of the average Indian consumer to opt for a budget-friendly option while purchasing a product, created a unique space that was initially catered to by Indian OEMs. Before Xiaomi ever took the smartphone market by the scruff of its neck — or even entered the Indian smartphone market, it was Indian OEMs like Micromax and Karbonn that enjoyed a significant portion of the market share. It was reported that in 2013, Samsung got the biggest piece of the pie with 31.91 percent of the smartphone market share, while Micromax came in second with 21.13 percent, followed by Karbonn with 11.02 percent.

Both the Indian smartphone brands were able to shrug off competition from other established brands like Sony and Nokia, and they were able to do that by focusing on the growing budget segment. However, Xiaomi’s entry in 2014 was undoubtedly a game-changer, with the Chinese brand leveraging technology, and offering cost-effective phones and some of the best smartphone under 20000 price segment, and was successful in doing it better than the Indian smartphone brands.

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Changing Sentiment – How Indian OEMs Can Gain Lost Ground

2020 has seen a significant shift in the consumer sentiment, with Indian consumers now opting for Indian-made products. The “Make in India” initiative by the Indian government, along with the changing socio-political landscape has resulted in a fluid market situation, that can help non-Chinese OEMs gain some lost ground in terms of capturing smartphone market share.

According to techARC, over the past six years, the market share captured by the Indian smartphone brands has witnessed a stark decline, going from 55 percent to less than 2 percent. Furthermore, during the first quarter of 2020, Indian smartphone brands captured a paltry 0.2 percent market share.

During the same first quarter of 2020, five Chinese brands — Xiaomi, Realme, OPPO, Vivo and OnePlus captured a whopping 73 percent of the market share, with only Samsung being the non-Chinese brand in the top 5 list. Given the meteoric rise of Chinese smartphone brands, especially in India, which already has over 500 million smartphone users, Indian OEMs can take advantage of the current predicament, and claw their way back to relevance.

Capturing Sub-5,000 INR Market Share

While the Chinese brands managed to grow exponentially over the past few years through competitive pricing and offering feature-rich phones in the budget and mid-range segments, there is still a massive demand when it comes to the sub-5,ooo INR smartphone segment. Xiaomi, which previously offered smartphones in this segment has reportedly decided to move away from this category, and other Chinese brands such as Realme are also focusing on offering smartphones in segments other than the sub-5,ooo INR, which can leave the door open for Indian OEMs to cater to the consumers wanting a smartphone for less than Rs. 5,000.

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For instance, Realme Narzo 10A, Realme latest phone is priced just below Rs. 9,000, and Realme hasn’t made a conscious effort over the past year to cater to consumers below that threshold. Realme has also announced 8GB RAM phones, such as Realme X50 5G and Realme X3 Pro, further moving away from the Rs. 5,000 price point. Indian smartphone brands such as Micromax, Karbonn and Lava can make the most of the current situation.

Given the fact that Indian OEMs now have a more sophisticated and reliable manufacturing ecosystem, along with expertise in designing smartphones as compared to a few years ago, Indian brands can tap the sub-5,000 INR market, which could lead to their resurgence in the smartphone industry.