This will be the year smartphone numbers start crossing those of feature phones: Arvind R Vohra

Interview with CEO and managing director, Gionee India

Right now, smartphone penetration is only about 20-25 per cent. So, even if 10 per cent of the people still stay with feature phones, there's a huge potential to upgrade users, Arvind R Vohra tells Ritwik Sharma

When it comes to Chinese brands, our general perception of them being inexpensive but not durable can be a problem. Did you face that problem?

That was there about three-four years back, not any longer. Now of course, a huge percentage of phones are actually from China. I think the amount of money that is being collectively poured in by Chinese brands has given them credibility.

Gionee plans to start manufacturing in India with a Rs 300-crore unit from this month and turn India into an export hub for South Asia and Africa. Has it been impacted by rising labour costs in China?

Already, 35-40 per cent of our manufacturing is done locally. No, it's not really influenced by labour costs in China. It's more to do with our commitment to the country, with the sop that is being offered in terms of duties and from a long-term perspective of being closer to the market.

What are the advantages of manufacturing locally?

The primary advantage is cost. Second, your time to market is much better. And third is as you go along you bring in mobilisation, you bring more cost advantages and your bottom lines will improve. Now, the game is how do you indigenise. How much of your content is local? So, that is the area we are working on. What this really means is in a phone there are about 700-800 parts, there's packaging, there's a charger, battery. How much of it do you start procuring locally? Some bit of it you can do locally by virtue of certain basic components being available. Some bit of it you require your suppliers from China or global suppliers to come in.

That's what you call the ecosystem. So, what we are really doing is whatever stuff now we can pick up locally in terms of maybe packaging - initially we started with the battery and the charger - we get those products locally. Therefore, you develop a supply chain in and around, and then you call your vendors. So, once you have a reasonable amount of suppliers here, vendors will automatically start coming.

Gionee has been in India since 2013 but it doesn't seem to have top of mind recall. What are you doing to get up there, among the brands that matter in India?

We have only one marketing strategy - just keep on building the brand, keep on building and investing in the brand. And second is have astute control on the shopping environment to give the consumer an experience and obviously we are in the process of setting up our own stores and exclusive service centres, pan-India.

What are the key requirements of the Indian smartphone user in terms of the features she looks for? Have you tailored your products to suit such preferences?

Whether you buy a computer from outside in India, it's the same. So, at the end of the day, from a hardware standpoint you will not have too much of a differentiation. What will be done is from a software standpoint, the kind of optimisation you have which is important. Broad features cannot change. You need millions of quantities on a device to get to levels of proper quality and cost.

As a late-entrant trying to woo the youth, how difficult is it to increase visibility?

Our user segment is in the 15-34 age group. And as far as all this is concerned, you will target them through properties that are aspirational, through television campaigns that are of a particular nature and obviously digital marketing. So, it's all about understanding who your consumer is and being available to them at relevant touch points.

How critical is the online channel for Gionee?

We don't intend to enter online marketing. I don't see too much of value coming from the internet. At one point, online sellers wanted to do predatory pricing, which we don't look at. We believe a large part of the market is with offline players, and secondly, for us online is a channel and not something that has a demand on its own.

Where will the next phase of growth come from in the Indian market and what changes do you expect there?

Right now, smartphone penetration is about 220 million, which is just about 20-25 per cent. So, even if you assume 10 per cent of the people will still stay with feature phones, there's a huge potential of upgrading them to smartphones. So, the market is going to be immense. I think this is the first year when smartphone numbers will start crossing feature phones, in value terms it has crossed a long time back. I feel that you still might have about 15-20 per cent feature phone users, the balance will move to smartphones. And by market size, it won't be more than 10 per cent in terms of value.