The proliferation of Chinese handsets in the Indian smartphone market has come as a huge blow to domestic manufacturers. The first quarter of the calendar year 2017 has seen some major changes in the market position of top five smartphone players, with domestic players Micromax Informatics, Lava International and Karbonn Mobiles being toppled by Xiaomi, Vivo Mobile India and Oppo Mobiles India, a study by India Ratings and Research has revealed.
The market share of Chinese mobile manufacturers during this period was about 51 per cent against a 15 per cent share last year, registering a growth of a staggering 340 per cent. Indian vendors, on the other hand, accounted for 14 per cent market share, down from the 40 per cent last year. Samsung, however, retained the top slot with 28 per cent market share, up from 25 per cent in the corresponding period a year ago.
The success of Chinese players can be attributed to their strong brand through substantial advertising expenditure and sales channel building funded by the sponsors. Chinese smartphone makers enjoy a debt-light capital structure and healthy liquidity due to the long payable period extended by their suppliers, the study said.
Better technological capabilities of the Chinese players leading to superior product offerings have also contributed to their success, it said, adding that large investments by Chinese players towards brand building and manufacturing facilities in India depict their long-term strategic intent.
Indian smartphone makers have been slow in reacting to ongoing product innovation in the market, and are further constrained by limited marketing budgets.
The entry of Reliance Jio and its free offers for voice and data also pushed the demand for 4g VoLTE-enabled handsets. Jio’s entry led to an all-out price war in the first quarter of 2017 with average data prices hitting a low of Rs 130 per GB. The market dynamics have pushed consumers to a faster migration from 3G to 4G and feature phones to smartphones.