India’s smartphone market boom: Made in China vs Make in India?

Earlier this week, the Android smartphone manufacturer, OnePlus, based out of China, had announced that they would manufacture some of their devices in India.

This is, of course, only the latest in a list of several other global manufacturers, including Xiaomi and Foxconn, to consider manufacturing in the country; the former even announced their first made-in-India model, the Redmi 2 Prime.

In today’s business environment in India, where the government is encouraging the world to ‘Make in India’, there is one section which is not quite happy — the Indian smartphone makers.

India — the place to be for smartphone manufacturers

Most estimates peg Samsung’s market share in the Indian smartphone segment to be 20–23%, followed by Micromax and Intex. India is currently adding smartphones, roughly, at the rate of 10% per annum. It is estimated that by 2017, India will overtake the United States as the second largest smartphone market.

With China’s smartphone market plateauing, India is now the place to be for smartphone manufacturers. This, of course, presents a huge opportunity to the global players, as well as Indian manufacturers. Sensing this opportunity, several companies have started focusing on capturing higher market share.

For instance, as of August 2015, China-based Lenovo has already broken its way into the top 5 companies in terms of market share in India.

According to an IDC report,

Chinese vendors have tripled their shipments YoY in India and doubled quarter-on-quarter (QoQ). Lenovo, Xiaomi, Huawei and Gionee alone accounted for 12% of the total smartphone market in the second quarter, double from a year ago.

Trends are telling

Things aren’t as simple as they seem though. Even as Indian manufacturers including Micromax, Intex and Lava brace for the storm of international players, a look at the breakdown in terms of pricing throws up some interesting scenarios.

It is known that a majority of the smartphones in use in India are under the $100 price range. This explains the huge market share (in terms of numbers) of the Indian companies like Micromax, Lava and Intex.

Does this mean that these companies are safe? Most certainly not.

Thanks to the booming e-commerce in the country, several international players, including the ones mentioned above, are now able to take a piece each of the proverbial cake, what with exclusive releases on certain e-commerce websites.

A look at any of the leading e-commerce sites will give one an idea as to how huge this surge is.

A screenshot from Flipkart. Note the names of the companies on the ‘go quickly to’ section at the top.

Yes, the international players are reigning, at least on e-commerce sites for now, on all price segments.

Now consider this: the financial incentives that the international players gain by manufacturing in India, instead of simply assembling the smartphones, or exporting them to the country, mean that they can perhaps even take a cut on the already competitive pricing, thereby giving them a clear edge over Indian companies.

Can India’s manufacturers stand their own, and put up tough competition to the Chinese giants?

This is one question on which the fate of several earnest smartphone manufacturers in India rests. Looking at the trends, wherein global competitors, especially Chinese manufacturers, are already capturing the market in a huge way, it most certainly wont take them too long to cause trouble for Indian companies.

But again, in a country so diverse, things could turn around any day. Who knows? Perhaps a wave of patriotism will hit the consumers, making them opt Indian phones over the Chinese!

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.