How did Chinese smartphones wipe out Indian brands?

We all remember the famous Micromax tagline ‘Nothing like Anything’ and wondered what it meant. The company brought one smartphone after another a decade ago, capturing a healthy market share and becoming India’s biggest mobile phone brand. Since then, it has been a downhill journey for not just Micromax but also other Indian mobile phone brands. 

The entry of Chinese companies decimated Indian brands like Micromax, Lava, Karbonn and Intex. Techarc, which tracks the market share of Indian vs Chinese brands, has analysed the impact. 

The share of Indian brands has now fallen from 68% in 2015 to a mere 1% in 2021 in terms of shipments, marking a complete reversal in the handset environment. In the same period, the Chinese brands’ volume share rose from 32% to a staggering 99% in 2021.

In terms of value too, the share of Indian brands has dropped to a mere 1.2% in January-October period of 2021 compared to 25.4% in the calendar year 2015.

In the same period, the Chinese have established their domination, hitting a value share of 64.5%, up from 17.8%. India brands are, however, still commanding a decent presence in the feature phone space. 

Even there, itel, a Chinese brand, leads the feature phone market with some 27% market share, followed by Lava. And the rapid switch from feature phones to smartphones doesn’t bode well for Indian firms.

Indian players say Chinese smartphones were able to pull off this feat by discounting, which is reflected in their financials.

Vivo made losses of Rs 349 crore in FY20, although its revenues went up by 45% to Rs 25,124 crore. Oppo also hit losses of Rs 2,203 crore in FY20 on revenues of Rs 38,757 crore.

To expand their market share, Chinese companies have been executing umbrella branding strategy. This allowed them to follow different approaches for different product lines. 

Due to new government policies, they have localised their production. This has made India the second biggest mobile manufacturer after China. Nearly all the phones sold in India are manufactured here.

A media report states that Apple and Samsung are set to locally manufacture smartphones worth around $5 billion in FY22 under the government's production-linked incentive (PLI) scheme, exceeding the Centre’s target by over 50%

Although, five domestic companies are availing themselves of the PLI scheme, they have committed only 10% of the total incremental production value of Rs 11.75 lakh crore under the five-year scheme.  

Lava and Micromax are plotting a comeback boosted by the PLI scheme. But given the dominance of Chinese brands and Samsung, your guess is as good as mine whether they succeed in their plans. 

Experts, meanwhile, argue that the main reason behind this is the failure of the country to invest in research and development, keep pace with technological change, and build better products. 

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