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Chinese Smartphone Manufacturers Find India’s Telecom Market The Best Bet

A boom in India’s smartphone market, combined with the ‘Make in India’ initiative, has seen a surge in Chinese investments flowing into India’s telecom sector — an estimated $6.4 billion over the last five years. In all, commerce ministry officials estimate that China invested $8 billion in India since the turn of the century, with about 80 percent of that in the last five years.

“The Chinese realized early that we had problems with mere imports, which were costing us hard currency. Having followed a similar regime of import substitution at home and having carefully studied Japanese who follow up export of goods with export of capital, Chinese firms like Huawei and Xiaomi have started investing in factories here,” said officials.

The Chinese also decided that the smartphone boom in India was their best bet to enter the local market. The smartphone market in India grew 14.5 percent in 2018 with sales of 142.3 million mobiles, according to research firm IDC. During the October-December 2018 quarter, smartphone shipment expanded 19.5 percent year-on-year to 36.3 million units from 30.3 million units in the same period last year.

This growth was partly fuelled by cheap smartphones, which Chinese manufacturers like Xiaomi and Oppo brought in. According to a report released by Counterpoint’s Market Monitor service last week, the market share of Chinese brands in the Indian smartphone market touched 66 percent in the January-April 2019 quarter. Xiaomi remained the smartphone market leader during this quarter with a 29 percent share.
Xiaomi currently has seven factories for smartphones across four campuses in India. It is also reportedly evaluating new facilities for smart TV sets in the country. The company is also encouraging its component makers to set up new factories to increase localization.

The aim, analysts said, was not only to tap the world’s second-largest smartphone market, but also to use India as a base for onward shipments to Africa and elsewhere.
“Ultimately, the Chinese mother plants in Southern China gain, as critical components will continue to be made there. But India too gains in factories that were not here before,” said officials. “They are following the same policy that the Japanese and Korean car makers followed in India.”
Chinese telecom giant Huawei’s sub-brand Honor is similarly hoping to bolster its investments here to not only grab a larger share of the booming local market, but also the export market that is expected to grow up here.

India is at the crossroads of sea-borne trade routes between the Orient on one side and the West and Africa on the other. “Whatever one-road-one-belt they build, they need to tap the future market that is Africa. Our position is such that we are geographically the nearest to Africa and shipments from here would be faster and cheaper than from China or Japan. We also are an extremely large market ourselves. Besides, other West Asian neighbours are unstable or do not have sufficient skilled workforce… This makes India a better locale for export factories whether it be for cars or smartphones,” said Prof Biswajit Dhar of JNU, former director general of Research and Information Systems for developing countries.―New Indian Express

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