Contract manufacturers of global firms to launch own TV brands
The trend of contract manufacturers launching their own brands started in China when owners of brands like Haier and TCL introduced their own brands to the market
New Delhi: If you own a branded television, chances are the TV set was actually manufactured by one of these companies, namely, Videotex International Pvt. Ltd, Super Plastronics Pvt. Ltd (SSPL), Malhotra Electronics Pvt. Ltd, Noble Moulds Pvt. Ltd, Veira Electronics Pvt. Ltd or Beston Electronics Pvt. Ltd.
Yet, TV owners are not familiar with the names of these Noida-based companies as they have restricted themselves to being contract manufacturers to global brands like Samsung, LG, Haier and home-grown brands such as Videocon, BPL, Crown, Suntek, Beltek, and lately Micromax and Intex. However, that is set to change as these firms launch their own TV brands.
“We have been manufacturing TVs for decades. We know how best to make a TV. Why not have our own brand? We can build the best value-for-money televisions,” said Arjun Bajaj, the scion of the family that owns Videotex. Bajaj has briefly worked with Samsung Electronics that sells the most number of TVs in India.
However, soon after he joined the family business, Bajaj launched TV under Daiwa brand. “At present, we are selling about 3,000 pieces a month through e-commerce channel and about 5,000 pieces a month through traditional retail in just four states,” said Bajaj who is now planning to expand his retail presence nationwide and is readying to launch Daiwa’s first 4K TV this year.
Avneet Singh Marwah, the scion of the family that owns SSPL has gone a step further. Besides SSPL’s own brands, Marwah convinced the owners of iconic photographic film brand Kodak to give him the licence to launch TVs under the Kodak brand in 2016. Over the next year and a half, Kodak captured a 3% share in India’s TV market that is projected to reach 18 million units a year by 2022 from 13 million in 2017 (according to a November 2017 report by consulting firm PwC).
Even though India’s TV market is dominated by Korean brands Samsung and LG and Japanese brand Sony, Marwah didn’t think twice before signing up another brand licencing deal with French TV brand Thomson that dominated the CRT television market in 1980s globally.
Meanwhile, in the last couple of years, other contract manufacturers such as Malhotra Electronics started selling TVs under Wybor brand, Beston launched Kevin and Viera Technoligies Pvt. Ltd introduced Noble Skiodo. Experts point to the challenges faced by these new brands. “It is not as easy as it looks like. These companies may have the manufacturing expertise. But the success of this business depends on distribution and after-sales services. Anyone can launch a new brand. But most of them may not be able to sustain,” said Rajat Wahi, partner (management consulting) at consulting firm Deloitte India.
To be sure, many of these companies are leveraging e-commerce as their preferred channel for distribution. “That’s a good way to start. But to scale up, we have built our distribution through physical trade channel. It takes time. And, service is key,” agrees Marwah.
Interestingly, the trend of contract manufacturers launching their own brands started in China when owners of brands like Haier and TCL—originally contract manufacturers to some of the world’s most successful brands—introduced their own brands to the market. Today, both are prominent TV brands in several markets.
The biggest example of a contract manufacturer turning into a strong competitor, however, is the computer firm Lenovo that was a contract manufacturer to IBM and is now one of its top competitors worldwide.
Will the Indian firms be able achieve what Lenovo managed to do? Only time will tell.
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