Grand Strategy: How do Chinese mobile phones capture the Indian market?

Xiaomi Group's interim financial report shows that the average daily activation of Xiaomi series mobile phones in India in July has rebounded to 72% of the pre-epidemic level. In the Indian market, Xiaomi brand mobile phones can be said to have firmly locked the first place in market share. According to the Indian smartphone market analysis report in the second quarter of this year, Chinese brand mobile phones successfully occupied 4 seats in the top 5 of the Indian mobile phone market, and a total of 75% of the Indian market share.

Chinese mobile phone manufacturers have such a strong dominance in India. Indian people use Chinese-made mobile phones but uninstall Chinese mobile phone apps. Is this just covering up the truth? However, the huge success of Chinese mobile phone brands in India today has not been smooth sailing. It is also the result of the continuous change of generations of mobile phone dynasties.

The era of copycats: Cultivating India's own brands to subvert international giants

2007 was a landmark year for mobile phones. Nokia launched the Nokia N95, which was both the pinnacle of feature phones and the swan song of the era. At the same time, Apple released the first generation of iPhone, which, although it looks tacky today, opened a new era of smartphones.

Although Nokia and Motorola disdained Apple's smartphones and still stubbornly insisted on their own products, smart Chinese businessmen smelled a new taste and vigorously developed copycat mobile phones. Gionee, Coolpad, Tianyu, Amoi, NEC, BBK, etc. came into being. There were many brands, but the quality was uneven. In that era when copyrights and patents were not taken seriously enough, Chinese mobile phones quickly occupied the domestic market for low-end smartphones with their price advantage, but the market position of Samsung and Apple in high-end smartphones was unshakable.

At this time, what are Indian mobile phone manufacturers doing? They also launched their own copycat brands, and soon the number of them increased from 5 to 28, and the market share increased from 0.9% to 17.5%. The most powerful brand Micromax even surpassed the market leader Samsung in quarterly sales. The former overlord Nokia has long been a sunset, and its price and innovation disadvantages make it powerless in front of local brands. However, unlike Chinese copycats, India does not have its own foundry. These local Indian copycat mobile phone manufacturers are completely dependent on China's Huaqiangbei for supply. It can be said that China has strangled the neck of Indian local mobile phone brands in the era of copycat phones. The success of Indian mobile phone brands depends on a simple rule: Indian local brand channels + Chinese supply chain. Relying on the mature domestic industrial chain, Chinese ODM manufacturers have produced cost-effective mobile phones that are more in line with user habits for Indian local brands, allowing them to compete with international giants.

Pioneering era: Four SIM cards, four standby, dual battery, Indians’ favorite

Gfive mobile phones may be unfamiliar to most Chinese people, or even unheard of. However, Gfive is the first Chinese mobile phone brand to enter India. Its biggest advantage is its low price and its considerate design for middle and lower-class Indians. When Gfive entered India in 2008, the average price of mainstream Samsung mobile phones on the market was around US$200, while the price of Gfive mobile phones was only half of that of Samsung.

What's more worth mentioning is that the charges within the Indian operator's network are cheap, but the charges outside the network may be three to four times more expensive, so many Indians will apply for several mobile phone cards because the cost of opening a card is very low. In response to this, Gfive Mobile developed a four-card four-standby mobile phone that was unprecedented and has quickly conquered the hearts of Indians. Another thing that bothered Indians was the problem of mobile phone charging. At that time, India's power supply was unstable, and locals often had to line up in front of a car and spend 10 rupees to charge their mobile phones with car batteries. Gfive seized this pain point and quickly launched dual-battery and dry-battery-supported mobile phones.

The three advantages of low price, four-SIM card and four-standby, and long battery life made the Gfive a big seller in India. It once occupied more than 10% of the Indian market share, ranking second only to Samsung. The impressive performance in 2010 made Gfive a big hit in India, and all major media published the headline: "Who's Gfive?"

However, Gfive's success was short-lived. In 2010, Nokia and Ericsson filed patent lawsuits against Gfive in multiple countries. Gfive withdrew from the Indian market amid the lawsuits, and the first rough pioneering of Chinese brand mobile phones in India ended.

The era of competition: many competitors rise up to "encircle and suppress" Samsung and Apple

After Gfive withdrew from India, a large vacancy appeared in the Indian mobile phone market, which attracted the attention of other Chinese high-end mobile phone manufacturers including Xiaomi, OnePlus, OPPO, vivo, Huawei, etc. Coupled with Apple and Samsung, which have already established a foothold in India, the Indian mobile phone market has become a scene of fierce competition, and Indian local brands still have basically no room for survival.

On March 3, 2016, Xiaomi held a Redmi Note 3 launch event at the Talkatora Indoor Stadium in Delhi, attracting 8,000 Mi fans. Redmi Note 3 became one of the best-selling smartphones of the year, and directly sent Xiaomi to the second place in market share for the whole year. In 2017, the Indian smartphone market really changed. Xiaomi caught up with Samsung with a growth rate of more than 30% per quarter, and finally surpassed Samsung with a 25% market share in the fourth quarter and took the top spot.

While Xiaomi is impacting Samsung's mid- and low-end products with its cost-effectiveness and online marketing, OPPO, vivo, OnePlus and Huawei have also achieved great success in India.

The main strategies of vivo and OPPO are advertising investment and brand marketing. In October 2015, vivo spent a huge amount of money to reach a cooperation with BCCI (Indian Cricket Board) and officially became the main title partner of IPL. OPPO is more aggressive and directly engages in cash marketing. In offline agents, OPPO often gives cash after the negotiation on the spot. Offline marketing has been deployed in about 85% of mobile phone stores at the township level in India. The huge investment has brought rich returns. As of the fourth quarter of 2016, OPPO and vivo's mobile phone market share in India has doubled.

While developing their own brands, Chinese companies have not forgotten to "cut off" Indian local brands. The first-tier ODM manufacturers that previously did OEM for India, such as Wingtech, Huaqin, and Longcheer, have become the main customers of Xiaomi, OPPO, and vivo, and have gradually turned their backs on orders from Indian local companies. Indian mobile phone brands, which are strangled by Chinese OEMs, are almost unable to breathe.

In the high-end smartphone market in India, Apple and Samsung still deservedly occupy the dominant position. Among them, Apple accounts for 47% of the market above 30,000 rupees. However, since 2018, Apple has had a hard time in India. In the first quarter of 2019, Apple sold only 220,000 units in India, and its sales plummeted by 42%. OnePlus, a new force from China, has quickly taken a share from Samsung and Apple by focusing on boutique flagship products, connecting online and offline, and entering the high-end market. In 2019, OnePlus's share of the high-end market in India increased by 85% year-on-year, and it has become the mobile phone with the highest market share above 30,000 rupees for three consecutive quarters. The price of OnePlus7Pro released in the same year has set a new high in India, priced at 49,999 rupees (about 4,873 yuan), winning 63.6% of the 400-600 US dollar market in one fell swoop.

According to the 2020Q2 (second quarter) Indian high-end mobile phone market report released by Counterpoint, a global authoritative research organization, OnePlus topped the Indian high-end smartphone market (priced at approximately RMB 2,800 or more) with a 29% share. At the same time, OnePlus 8 became the best-selling model in the Indian high-end market in Q2.

From the current perspective, Apple and Samsung have shrunk their market share in both the low-end and high-end markets in India under the joint "encirclement and suppression" of Chinese brands. According to the 2019 Indian mobile phone market statistics report released by IDC: Xiaomi Technology leads Samsung with a market share of 28.6%, while Samsung's 20.3%, but Xiaomi has shown an upward trend both year-on-year and month-on-month, while Samsung has shown a clear decline in both low-end and high-end models, and the gap between it and Xiaomi is getting bigger and bigger, while the gap with vivo is getting smaller and smaller, and its second place in the market is precarious. In 2019, vivo and OPPO accounted for 15.6% and 10.7% of the market share in the Indian market respectively, while their annual shipments increased by 67% and 60.5% respectively. Compared with the year-on-year decline in Samsung's shipments, it is just around the corner for Xiaomi, vivo and OPPO to fully occupy the top three in the Indian mobile phone market in the future. Even Apple's dominant position in India's high-end mobile phone brands is not unshakable. OnePlus's all-out challenge has put Apple under great pressure. Except for the space at the top of the price pyramid, the space in other mid-to-high-end price ranges is becoming increasingly narrow.

Of course, after Chinese mobile phone brands have fully occupied the Indian market, the biggest problem they face is still their own competition. When Xiaomi, Huawei, vivo, OPPO, Realme and OnePlus compete with each other, Apple, Samsung and even Indian local brands may see hope for rebirth. Five years later, when the Indian mobile phone market is saturated, who will emerge as a dark horse and finally dominate the market? We can only wait and see.