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There is a strong wave of anti-China sentiments prevailing in India following the Galwan clash. There are calls to boycott Chinese products. Several electronic stores across the country have stopped the sale of Chinese brands. 

Electronic equipment is the largest market for Chinese goods in India with smartphones being the most important

component - with a market share of about 73%. Industry insiders believe that if Chinese products are boycotted in India then non-Chinese and Indian companies will be able to garner greater leverage.

Recently, Indian smartphone company Micromax has previewed the launch of three new smartphones through its social media channels. The brand which did not launch new products for quite some time will be back with three smartphones that includes a budget phone with premium features and a modern look.

Market share

According to a research by Counterpoint, in the first quarter of 2020 Xiaomi still led the Indian smartphone market

with a 30% share. It was followed in the second position by Vivo, another Chinese brand with 17% market share.

Another two Chinese brands, namely Oppo and Realme constitute 12% and 14% of the market share respectively. Samsung, a South Korean company, which remained in the second spot for two consecutive years since the fourth quarter of 2017, slipped to the third spot with 16% share. The other brands shared the remaining 11% of the market. However, market insiders think that there can be a drastic shift in the market in the second quarter of 2020 and Samsung can gain in its market share due to the prevailing anti-China sentiment. It also has to be noted that Indian brands share only 0.2% of the market in the current situation.

Why are Indian brands lagging behind?

There are multiple theories behind the low penetration of Indian phone brands. These include the Chinese players’ mammoth marketing spend, aggressive pricing, higher volume of production and so on. Also, Chinese companies such as Xiaomi have consistently succeeded in delivering superior quality products at lower prices. It was also the first to cash in on the e-commerce boom.

Faisal Kawoosa, the founder at techARC, in an interaction with Hindustan Times explained, “There are both internal and external factors. Internally, these companies did not focus much on research and development (R&D) and intellectual property (IP). Rather, they primarily focused on the business and trade side of the equation. The negligible investment in R&D and IP resulted in low to no barriers of entry for others, especially Chinese original equipment manufacturers (OEMs) who already had the pulse of the market as they were supplying to these Indian brands. Another factor is also the emergence of online selling. Many Indian brands believed that it will take years for Chinese brands to establish the channel. But they bypassed it using the online medium.”

Many think that the ‘Make in India’ initiative did not provide the Indian brands with any extra funding and advantages but was only used as an instrument for election propaganda. If the Indian brands enjoyed some advantages, the present scenario would have been different. Surprisingly, available data shows that in 2015, Indian brands occupied 16% of the market. However, since then they have gradually lost out to Chinese competition.

How can Indian markets thrive?

At present, India has a reliable manufacturing ecosystem and skills in design. There is a stress on investment in technology, R&D and IP development. Due to the Covid-19 induced economic crisis, a large number of IT professionals may lose their jobs. These professionals can be utilised by start-ups and Indian mobile brands to bring in innovations in their products. Indian companies should also attempt to tap the market segment which has been abandoned by the foreign brands. Smartphones within the range of `5000 can be one such segment.

Future

However, this is not the first time that Chinese products are receiving a blow in India. In 2014, Xiaomi was pulled up and its phones were banned by the Indian Air Force after security company F-Secure found that the phones were sending details like phone number, IMEI number and the name of operator to a remote server in China. Available data state that almost 90% of the components used by Indian phone companies come from China. The Covid-19 situation has taught that developing a manufacturing base at home is a feasible option. India has got all the potentials to be a manufacturing hub. A little support from the government in providing facilities and investments will drive the industry further.