How Chinese smartphones are eating into share of Indian brands

In 2015, as many as 15 major Chinese smartphone brands stepped into India. No new Indian smartphone brand captured the eyeballs

Increasing activity by Chinese telecom handset makers and new entrants from that country are putting pressure on the market share of homegrown companies.

In 2015, as many as 15 major Chinese smartphone brands stepped into India.

No new Indian smartphone brand had captured the eyeballs.

During the period, Chinese smartphone majors such as Xiaomi, Vivo, Oppo, Huawei and LeEco, among others, have not only strengthened their operations and increased sales in the local market but managed to establish their brands, analysts observed.

Chinese companies are now focusing on providing user experience in terms of dedicated video and audio content, and utility applications, deviating from their conventional focus on superior hardware features.

The efforts paid off for these companies and have resulted in a shrink in market share of their Indian peers, put together.

During 2015, Chinese smartphone vendors increased their market share in India to 22 per cent, compared to 15 per cent at the end of 2014.

And, the market share held by homegrown brands was down to 38 per cent in December 2015 from 43 per cent a year before, shows data from International Data Corporation.  

According to Faisal Kawoosa, general manager, telecom and semitronics, CyberMedia Research, says Chinese companies also benefitted as they successfully managed to get rid of the ‘cheap’ tag that was earlier associated with products made there. “New Chinese brands entering India have positive impact on the growing market share as well,” he said.

“Chinese brands rose significantly on the smartphone experience curve in terms of hardware design, and software and UI (user interface) integration.

Further, these brands have been very aggressive in terms of their device launches and capturing the trends,” said Tarun Pathak, senior analyst, mobile devices and eco-systems, Counterpoint Research.

Apart from pro-active steps that the Chinese companies are taking to raise share in the Indian market as the pace of economic growth slows in their homeland, the inabilities of various Indian companies have cost the latter.

Major Indian smartphone makers, however, say they are more inclined to a steady profit growth and margins, rather than running after market share.

Shashin Devsare, executive director, Karbonn Mobiles, which focuses on the below-Rs 7,000 price segment, feels Indian consumers have become less loyal to brands.

“Market shares which are solely based on shipment numbers are not a true representation of growth and business financials,” he added.

“Lava smartphone sales grew 55 per cent by volume in 2015.

“We registered more than 100 per cent growth in 2014-15 over 2013-14 and have achieved revenues of Rs 7,000 crore (Rs 70 billion) in 2014-15, becoming one of the leading players in the mobile handset industry,” said Navin Chawla, chief operating officer, Lava International.

Kawoosa says the shrinking market share of Micromax, largest among Indian handset firms, had a negative impact on the total market share.

The share of Micromax between December 2014 and December 2015  went from 18 per cent to 14.1 per cent.

Micromax and Intex declined to comment for the story.

Indian brands which mostly targeted the value and mass segments (Rs 10,000 and below) are under pressure from Chinese peers like Lenovo.

“Initially, in 2011, when smartphones entered in India, homegrown players gained from their better offline distribution and lower pricing. As Chinese firms are now getting into offline distribution, too, pressure is building,” Pathak said.

“What local brands did to global brands a couple of years ago, the Chinese brands are doing to local Indian players.”

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