Chinese smartphone makers grow strong despite Indian govt. sending them notices over data theft concerns

According to the latest IDC report Xiaomi and Vivo have shown growth even after the application of GST. 28 million smartphones were shipped to India in Q2 2017 thus recording a decent 3.7 percent Quarter-on-Quarter

e4m by Ronald Menezes
Updated: Aug 21, 2017 7:41 AM

India is a large importer of electronic products from China. Brands like Xiaomi, Oppo, Vivo, Lenovo are some of the bigger names when it comes to Chinese mobile manufacturers, while many smaller brands also amplify the buzz. These four brands make up for 45 percent of the smartphone market according to International Data Corporation’s (IDC) report in Q2 2017. 


Samsung leads the lot with 24 per cent of the market share followed by Xiaomi at 17 per cent, Vivo at 13 percent, Oppo at 8 per cent and Lenovo at 7per cent. 


Data Concerns


With the fear of Chinese smartphones stealing data, the government sent notice to 21 companies out of which majority were Chinese brands. The move could also be seen as a subtle retaliation to the stand-off at Doklam with China. Smartphones could be one of the biggest threats to data security and in times when Chinese smartphones are dominating the market share, the move seems justified. The concern over smartphones highlights security and trade threats. 


The concerns however, do not reflect on the market scenario of Chinese brands. 


According to IDC’s latest report 28 million smartphones were shipped to India in Q2 2017 thus recording a decent 3.7 percent Quarter-on-Quarter (QoQ) growth even after the implications of GST and a meagre 1.6 percent Year-on-Year (YoY) growth. 


The implementation of GST also meant that the shipments would be weaker in the second quarter as a major focus was to sell out the older inventory, however proactive steps taken by vendors helped in stabilising the sell-in for the month of June. 


Xiaomi and Vivo showed strong growth in the quarter and seem to be strangulating other Indian manufacturers like Micromax and Lava who also produce affordable budget smartphones. 


Xiaomi secured its number two spot with a strong 23 per cent QoQ growth in the second quarter. Xiaomi’s Redmi Note 4 with over 2 million shipments in Q22017 has become the highest shipped smartphone in a single quarter in the history of Indian smartphone. Vivo remained in the third spot with an impressive 26 per cent growth QoQ and eventually captured 13 per cent of the market share in the same quarter. 


Samsung, OPPO and Lenovo faced the brunt. Samsung retained its top spot but at the cost of a marginal decline of 4 per cent YoY. OPPO and Lenovo saw a drop of 13 per cent and 25 per cent QoQ. 


Overall, mobile phone market shipments saw a modest 6.5 per cent QoQ growth after declining consecutively for two quarters. 34 million units of feature phones were shipped in the Q22017 with 8.9 per cent growth from the previous quarter but remained flat as compared to the same period last year.


Stand-off: Indian Vs Chinese Brands


With the increasing shipments of Chinese brands in India, the Indian smartphone industry seems to have taken a backseat. Most of the Indian brands like Micromax, Lava and Karbonn caters to an audience that accesses budget smartphones while its Chinese counterparts largely focus on smartphones above 10,000 rupees. However, Indian vendors registered 18 per cent QoQ growth after three quarters of constant decline. In Q2 2017 share remains limited to 15 per cent of overall smartphone market. 


On the other hand, China-based vendors, with their massive ongoing marketing spend and channel expansion, further cemented their position with 54 per cent market share and registered 9 per cent QoQ growth in the Q2 2017.


“Indian vendors have shown an early sign of recovery and now, when most of them are ready with their 4G product portfolio, a new set of China-based competitors have entered in the sub- $150 segment,” said Upasana Joshi, Senior Analyst, IDC India. “Indian vendors are putting in all their efforts and second half of year will be crucial, either it will see a revival of Indian vendors or emergence of new dominance in the sub- $150 segment from China based vendors,” added Joshi.


Festive Season


With the new taxation policy coming in, the third quarter of the year started slowly as the sales channels were adjusting to the system.


The Indian smartphone market is now preparing for the biggest quarter so far. Offline channels have already cleared the old stocks, eTailers are getting ready for mega online festivals and vendors are set to launch new models in the Diwali festive period.


“The sentiment is indeed positive in the market. All the ambiguities have cleared now and vendors are gearing up for the upcoming festival season to recover from the slow start in the first half of this year,” said Jaipal Singh, Senior Analyst, IDC India.


India Forecast


The festive season is around the corner and it is expected to be one of the brightest quarters for feature phones. The feature phone and budget phone segment is undergoing a vast transformation especially after the announcement of the Reliance 4G handset. Navkendar Singh, Sr. Research Manager, IDC India said, “Reliance’s 4G Jio Phone has created an excitement both in the channel and consumer front. This may stabilise the declining feature phone market in the short term and year 2017 is expected to end with a similar volume as last year. Experience of early adopters will be crucial for the 4G feature phones in the 2G dominated category. Network connectivity, battery performance and internet enabled multimedia experience will carve the path to the next phase for this category.”

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