The decisive battle for the Indian market: Can Chinese mobile phones get a piece of the pie?

The May Day holiday has just passed, and the most shared video in the circle of friends is not "You are still stuck in traffic on the highway on your way home", but Lei Jun's magical song "Are you OK?". The wonderful editing of this film made everyone almost forget Lei Jun's localized English, and pay more attention to Xiaomi's new products at the India conference.

Why is India, as the second market that Chinese mobile phone manufacturers cannot miss, attracting so much attention? The author summarizes the following reasons: First, the Indian market is quite similar to China a few years ago. India has a population of about 1.2 billion. Although mobile phone users account for nearly 900 million, there are only more than 100 million smartphone users. Secondly, as a developing country, the needs of Indian users are very similar to those of Chinese users. For example, they want to have multiple SIM cards on standby and pay close attention to the consumption of data traffic. Finally, cost performance is also the strongest demand in the Indian market. In the fourth quarter of 2014, 23% of the 21.6 million mobile phones shipped in the Indian market were priced below US$100, and 41% were priced between US$100 and US$200. This price range is exactly the main market for Chinese mobile phone brand manufacturers.

Current situation of Indian market

According to the latest survey report by market research firm Counterpoint Research, in the first quarter of 2015, the shipment volume of the Indian smartphone market increased by 21% year-on-year. Lenovo Group's market share increased significantly to 5.2% due to its successful acquisition of Motorola, making it one of the top five. At Lenovo's 2015 new fiscal year swearing-in ceremony, Lenovo Group Executive Vice President and Lenovo Mobile Business Group President Liu Jun said that with the slowdown in the domestic smartphone market, overseas markets will become Lenovo's key breakthrough market, with a target shipment volume of 10 million units in the Indian market.

Although Samsung Electronics has retained its leading position in the Indian smartphone market, it has been squeezed by local Indian brands and Chinese mobile phone brands, and its market share has shrunk. In the first quarter of 2015, Samsung's market share was only 27.8%, a decrease of 5.5 percentage points from 33.3% in the same period last year, but still higher than 27.4% in the previous quarter.

Samsung launched the low-end smartphone Z1 with Tizen operating system for the Indian market, priced at only $89. The head of Samsung Electronics said that even if the price is lowered, as long as the production can be increased, the profit reduction will be reduced. In addition to trying to build the Tizen ecosystem, the effect of this strategy can also restore the market share of low-priced mobile phones.

Micromax, a local Indian mobile phone brand, once attracted much attention in the second quarter of 2014, with a 16.6% overall mobile phone market share, surpassing Samsung's 14.4%. According to Counterpoint Research data, Micromax's smartphone market share reached 15.3% in the first quarter of 2015, lower than 16.7% in the same period last year and 19.5% in the previous quarter, ranking second.

In 2010, Micromax took advantage of Spreadtrum's investment and used Spreadtrum chips to reduce the price of smartphones to 400 RMB. Thanks to its ultra-low price and good performance, Micromax quickly became the largest smartphone brand in India. Its A62 smartphone was only US$70, and it achieved an annual shipment volume of 10 million just two years after its establishment.

Recently, there are rumors that Micromax plans to expand its fundraising and hopes to attract investment to challenge Samsung Electronics' leading position in the Indian smartphone market. Micromax CEO Vineet Taneja said that the funds will be used to develop mobile software based on local needs for Micromax phones that support 21 Indian dialects. According to a report on the U.S. Forbes website on April 28, India's Micromax will transfer 25% of its shares to a consortium formed by multiple investors, including Ant Financial, an online financial services company under Alibaba Group.

In this Counterpoint Research survey, Intex and Lava ranked third and fourth with 9.4% and 5.4% of the smartphone market share respectively. According to Wang Yanhui, Secretary General of the China Mobile Alliance, Micromax, Intex, and Lava, the Indian smartphone manufacturers, are the biggest competitors of Chinese mobile phone brand manufacturers. They mainly adopt the OEM model, and almost all of their products come from Shenzhen foundries. Therefore, compared with them, how Xiaomi can replicate its advantages is a problem.

New moves by Chinese manufacturers

In addition to Lenovo Group, many Chinese mobile phone brand manufacturers, including Xiaomi, Huawei, Gionee and vivo, have made the Indian market a focus of their overseas market development in 2015.

At the World Mobile Internet Conference, which just concluded, Xiaomi co-founder and president Lin Bin and Huawei Honor president Zhao Ming described their plans and visions for the Indian market. Lin Bin said that Xiaomi has started to cooperate with local Indian e-commerce companies and telecom operators in India, and has received investment from the Indian multinational company Tata Group; Zhao Ming said that it is expected that shipments in the Indian market will increase 10 times to 2 million units in 2015, and Huawei is brewing new plans for the Indian market, and does not rule out building a factory in India.

Lei Jun said that Xiaomi has set a long-term localization strategy for the next 5 to 10 years, and the Xiaomi India team will be composed entirely of Indian employees. Xiaomi will replicate its successful experience in China and become the No. 1 market share in India within three to five years. According to the survey data of Counterpoint Research in the third quarter of 2014, Xiaomi once obtained 1.5% of the smartphone market share. It is rumored that Xiaomi's goal for the Indian market in 2015 is to sell 10 million units.

Compared with Huawei and Xiaomi, Gionee and Vivo, which entered the Indian market earlier, have set bolder goals. According to Gionee CEO Lu Weibing, Gionee's sales in India have exceeded 4 million units, and its current market share in India is about 3%, compared to only 1% last year. In 2015, Gionee's goal in the Indian market is to rank third in sales and to build a complete production plant in India within the next three years.

It is reported that BBK Group also plans to open a factory in India this year, and has negotiated with the Indian government and obtained approval. In the next 3 or 4 years, Vivo may open a factory in Girgaon, India. Regarding the sales of Vivo smartphones, Tracy Chen, general manager of Vivo India, said that the expected sales volume in India is 40 million units. "The factory is expected to start construction in 3 or 4 years. Vivo shipped 40 million smartphones in 2014, and we hope to achieve a sales volume close to that in the first year of entering the Indian market."

The third party of concern

In fact, it is not only Chinese mobile phone manufacturers that have noticed the potential of the Indian market. Apple entered India as early as 2011, but unlike its position in other overseas markets, the company has not become a major brand in India. "Now, all this will change. Apple is planning to become a major brand in India, which is seen as one of the most promising markets in the world," said a senior Apple official.

Apple recently announced that its sales revenue in the Indian market exceeded $1 billion for the first time in the fiscal year 2014-15 (ending March 31, 2015), a year-on-year increase of 40%, nearly three times that of the fiscal year 2011-12. Although India was neglected for several years, the South Asian giant is now regaining attention. Apple is actively developing the Indian market and promoting marketing. India is increasingly becoming one of the fastest growing markets for Apple.

According to data from Counterpoint Research, Apple sold 500,000 iPhones in India in the fourth quarter of 2014, while in 2013, the annual sales of iPhones in India were only 1 million. Apple has reduced the repayment period offered to distributors from the standard 14 days to 7 days, and reduced the iPhone's gross profit margin of 9-11% by 0.5%-1%. Apple expressed its willingness to provide consumers with more acceptable installment payments and help distributors increase sales. Currently, Apple does not have an official Apple Store in India, and can only provide Apple products through Apple's senior authorized dealers and Apple product stores opened in other retail stores. In December last year, there were reports that Apple planned to open 500 new distribution networks in India.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.