Vivo and OPPO in troubled waters. Hype or reality?

Amidst reports of Chinese expats heading back home, experts say it’s more of a hype than reality. We at e4m take a closer look at the issue

e4m by Naziya Alvi Rahman and Ronald Menzes
Published: Aug 29, 2017 7:53 AM  | 5 min read

Amidst reports of Chinese expats heading back home, there is also a question that arises. Is the situation really that bad? Chinese smartphone manufacturers have had a decent ride in India ever since they made an entry in the market. Joining the bandwagon earlier this month is Chinese brand “Comio”.

Three of the biggest Chinese smartphone brands in India had entered the market at the same time (2014) and ever since their journey began they have constantly partnered with big names in the country and have seen increased popularity and brand associations over the last three years. That’s not all- they have seen considerable growth in the market share as well, that too in a short span.

According to IDC’s report, until Q2 2016 there were no signs of Chinese smartphones squeezing into the top 5. Samsung led the lot (25.1%), followed my Micromax (12.9%), Lenovo (7.7%), Intex (7.1%), Reliance JIO (6.8%). However by Q2 2017 Samsung still led the race but the ranks after that have shuffled. Xiaomi now holds the second spot with 17% of the market share, followed by Vivo (13%) at third, OPPO (8%) at fourth spot.

The sudden surge of Chinese smartphones has come with a long list of influential brand associations over the years and even new phone launches.

So, are the reports claiming trouble for brands hyped?

Speaking about the major reshuffling and Chinese expats heading back to China, key industry sources associated closely with VIVO confirmed that there are no major shifts happening. Most marketers and industry people called it “a minor shuffle being blown out of proportion.” Industry sources told e4m that even the stepping down of Vivek Zhang, CMO, Vivo India was a strategic one in order to give him another role within the organisation.

“It is business as usual. I think there is nothing like that. Both the companies have made huge investments and are further making investments in terms of advertising spends. The reports are false and highly exaggerated,” claimed a senior media planner who did not wished to be quoted.

Interestingly, barely two days ahead of the reports around sales drop of Vivo and Oppo, Will Yang, Brand Director, OPPO India, told exchange4media, how the company is looking forward to the upcoming festive season. “For the festive season, we have a lot of surprises planned for our consumers that are aimed at giving them what they like the most, which is quality and innovative technology,” he had said. Not just that, Yang also maintained that the company is planning to expand largely over the next three years.

“By the end of this year we have targeted to setup 35,000 Point of Sales and 180 after sales service centres. Side by side we are also focused on a long-term association with our partners such as Bigg Boss season 11, Baahubali 2 and Dance Plus season 2. Our associations are keenly mapped keeping in mind what’s popular amongst Indian consumers i.e. entertainment, sports and lifestyle events like Fresh Face engaging with the youth,”  Yang told e4m.

With the competition heating among the Chinese brands, a report by CMR says, “Several Chinese brands like Xiaomi, Lenovo, Vivo, Oppo and iTel showing growth in the range of 7 – 33% in Smartphones (iTel being the exception with growth of 293% on a small unit base), the focus is now all about competition among these brands to occupy the leading positions in the market.”

“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,” says Jaipal Singh , Senior Analyst, IDC India in a report published by them.

Chinese manufacturers expanding to new markets

With their market share being strengthened In India, experts claim that Chinese brands are now shifting focus to other markets across the world. OPPO launched in New Zealand in March this year while Xiaomi also launched in Thailand just few days ago.

““With the focus moving out to other markets around the world these Chinese manufacturers may just be moving out key personnel at places where strategies need to be framed and consumers need to be won from the grass root,” said another senior industry expert.

According to IDC’s report until Q1 2017, Samsung led the race globally with 23.3% market share, followed by Apple (14.7%), Huawei (10%), OPPO (7.5%) and Vivo (5.5%).

With such numbers backing them, Chinese manufacturers like OPPO and Vivo would surely look forward to expanding globally. 

No more Doklam stand off

Also, with the possibility of Doklam War creating tension for business between the two nations now coming to an end, following disengagement, there seems to be little worry for Chinese manufacturers in India. The stand-off between the two nations threatened the market standing of Chinese manufacturers in India but with the threat now coming to an end, they could be breathing a big sigh of relief.

Effects of GST

According to IDC, “28 million smartphones were shipped to India in Q22017, which is a modest 3.7% Quarter-on-quarter (QoQ) growth and a meagre 1.6% Year-on-year (YoY) growth. Just as the market had started to recover from the impact of demonetisation from late last year, the implementation of the Goods and Services Tax (GST) in the country from July 2017 meant weak sell-in shipments in the second quarter as the focus was on clearing the existing inventory. However, vendors’ proactive steps on absorbing the impact of GST helped to stabilise the sell-in for the month of June.”

The impact of GST, however, was not only felt by Chinese manufacturers but also by Indian manufacturers.  “The GST impact will diminish by and large by September and markets are expected to bounce back. It won’t be fair to assess a company’s sales based on its performance during the GST implementation period,” added a senior media planner.


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