China mobiles to flood GSM mart

Chinese manufacturers are making a major dent in the mobile phone market, from May this year, collectively selling over 1 million mobile phones mostly as original equipment manufacturers (OEMs) to operators.

That figure estimated by the Indian Cellular Association (ICA), the apex body for phone manufacturers, constitutes nearly 17 per cent of the 6 million per month mobile market.

According to industry estimates, Chinese manufacturers are expected to sell around 1.5 million phones a month, nearly one-fifth of the total market.

A few months ago, the share of Chinese manufacturers in the mobile market was far below and their attempts to sell cheap GSM phones directly to consumers came a cropper.

The quiet entry has been prodded by the launch of Reliance Communications' "Classic" range of mobile phones, which were offered at Rs 777 from April this year. Industry estimates that as much as 65 per cent of the phones are sourced from Chinese manufacturers like TCL, Huawei and ZTE.

According to industry figures, in the CDMA space the share of Chinese manufacturers in the top cities have shot up from around 38 per cent in April this year to around 54 per cent in June.

The share of Classic phones (the bulk were supplied by Chinese manufacturers) has gone up from around 40 per cent in April to 60 per cent in June. Obviously other competitors, which include companies such as LG, Samsung, Nokia and Motorola, have collectively seen a fall in their market share.

Industry analysts say that Reliance bought over 5 million phones (65 per cent of it from China) and it exhausted in four months. A Reliance spokesperson declined to comment on issues relating to the phone sourcing.

In the GSM space, where the Chinese companies have hardly any significant presence "�because bundling has not been the norm, the scenario is about to change.

According to handset manufacturers, operators expect that about 15 per cent to 20 per cent of the incremental subscribers (around about 5 million GSM subscribers) to come from bundled offerings.

Says national secretary of the Indian Cellular Association, Adarsh Shastri: "My estimate is that 70 per cent of this GSM bundled market will be dominated by the Chinese manufacturers with price advantage, while the rest will be served by the tier one mobile phone makers".

According to Shastri's estimates, about 6 lakh GSM mobile phones per month will be supplied by Chinese manufacturers which will be either branded under their name or under an operator brand name.

However, he says that the lower end market could explode and the incremental increase in subscriber base could be much higher (COAI estimates it will hit 10 million per month).

The main attraction is of course price, which reduces the cost of entry barrier, as operators get into smaller towns and rural India.

Says Rajesh Sharma head of sales of Chinese mobile phone manufacturer Bird Corporation: "Of course price is the key which makes us attractive. We are aggressively moving towards tying up with companies like Airtel and Hutch to give bundled offerings".

Industry estimates that differences in price could range from anything between Rs 250 and Rs 1,000 a piece at the entry level depending on the size of the order. For instance, Chinese companies are offering phones at Rs 1,000 and even below.

But says Sunil Dutt, former head of marketing in Nokia India, who is planning to set up his retailing business: "The price differential is narrowing and might not be more than $ 5"�$6 and companies such as Nokia which also manufacture phones in China will not find it difficult to combat the challenge".

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Chinese manufacturers have collectively sold over 1 million mobile phones since May this year, mostly as original equipment manufacturers (OEMS) to operators.

The figure estimated by Indian Cellular Association, constitutes nearly 17 per cent of the 6 million a month mobile market