China rules smartphone market amid boycott calls

Counterpoint Research data show Chinese firms' share of the Indian smartphone market has grown steadily this year

At a time when the social media is abuzz with calls for boycotting Chinese products, consumers in the smartphone market are not paying any attention. Preliminary data from analyst firm Counterpoint Research show the share of Chinese firms has continued to grow steadily during the year, despite increasing competition in the domestic market.
 
The share of Chinese brands was 21 per cent during the January-March quarter. It went up to 32 per cent at the end of September. Meanwhile, established smartphone players in the market have lost significant share. Market leader Samsung’s share has gone down to 21.6 per cent from 29 per cent in March – a loss of seven per cent. During the September quarter, it lost four percentage points. The second biggest player, Micromax, too, has lost seven per cent since January-March. Intex, which held on to the third spot since early 2016, has now slipped to the fifth place.
 
Meanwhile, four major Chinese brands – Xiaomi, Vivo, Oppo and Le Eco – has managed to garner close to 14 per cent share of the total devices shipped during July-September – up from 11 per cent in the first half of the year. While Xiaomi has secured the sixth spot, Vivo and Oppo have occupied the seventh and eighth spots, respectively. Lenovo, another Chinese brand which was catching up with Intex, captured the third spot in September.
 
Various factors have worked in favour of these firms during the past few quarters. Faisal Kawoosa, general manager, telecom and semitronics at CyberMedia Research, says as the market in India is undergoing fundamental change in the nature of consumer buying behaviour, such anomaly can happen. While till early 2015, most smartphone sales used to come from first-time buyers of smart devices, in 2016, second-time buyers or repurchases have taken the lead.
 

“The above Rs 10,000 price segment has become significant as an increasing number of consumers are upgrading their smartphones, unlike earlier when conversion from feature phones to smartphones used to be the key driver. This has thrown challenge to many popular brands, especially Indian-origin, operating in the market for long. Chinese brands have managed to come up with superior offering with value for money proposition in the Rs 10,000-15,000 price range,” said Kawoosa.
 
An aggressive focus on offline sales, backed by online presence, has benefited Xaiomi and Le Eco. Both had started their journey as online-only brands in India. Oppo and Vivo had been increasing their offline presence since they entered the market in 2015.
 
According to Kent Cheng, chief executive officer of Vivo India, the firm will continue as an offline brand and is working on to strengthen its distribution through brick-and-mortar outlets. Incidentally, all these four brands have started manufacturing in India after they witnessed significant uptick in sales. Vivo is eyeing a seven per cent market share by December and is considering increasing its production capacity next year.
 
Higher retailer and distributor margins from newer players in the market has also worked in their favour. According to trade sources, sellers’ margin from brands which do not feature among the top three are higher. “When consumers are not insistent on buying handsets from one particular brand, we tend to push products which give us more margin,” said the store manager of a large electronic retail chain. Also, lack of attractive products in the above-Rs 10,000 price range from the Indian brands helped Chinese brands take the lead, retailers said.