Ban on Chinese brands may not revive local biz | Mint
Active Stocks
Fri Feb 23 2024 15:58:13
  1. Tata Steel share price
  2. 145.50 -0.24%
  1. State Bank Of India share price
  2. 759.40 -0.86%
  1. HDFC Bank share price
  2. 1,420.90 0.08%
  1. NTPC share price
  2. 337.70 -0.54%
  1. ITC share price
  2. 411.60 -0.65%
Business News/ Companies / News/  Ban on Chinese brands may not revive local biz
BackBack

Ban on Chinese brands may not revive local biz

Indian companies do not have the scale to fill the gap, say some analysts

Lava and Micromax have launched several new smartphones in the budget segment since mid-2020 after the Indo-China border conflict led to calls for a boycott of Chinese brands. reutersPremium
Lava and Micromax have launched several new smartphones in the budget segment since mid-2020 after the Indo-China border conflict led to calls for a boycott of Chinese brands. reuters

SA ban on cheap Chinese phones may prove to be a huge setback for brands such as Xiaomi, Realme, and Transsion Holdings, which owns the Tecno, Itel and Infinix brands, even as analysts pointed out that Indian companies do not have the scale to fill the gap.

Bloomberg News reported on Monday that India seeks to restrict Chinese firms from selling handsets cheaper than 12,000 to boost its faltering domestic industry.

“Chinese OEMs sell more than 80% of all phones below this price point," said Tarun Pathak, research director at Counterpoint Research. “Realme and Xiaomi account for 50% of the smartphones in this segment," he added.

Though this particular segment is not growing anymore as there is waning consumer demand, it still accounts for 40% of the smartphones shipped in India, according to Navkendar Singh, associate vice-president for devices research at IDC India, South Asia & ANZ.

According to IDC’s quarterly report released on Monday, demand for smartphones in India is contracting due to rising inflation and higher input costs, resulting in high retail prices. The average selling price (ASP) of smartphones reached a new high of $213 (approx. 16,957) in the June quarter (Q2) of 2022. Most Chinese brands have done well, despite some of them being under the government scanner for allegedly laundering money and evading customs duties.

According to Bloomberg, the ban attempts to revive fledgling domestic brands that account for hardly 1% of the smartphones sold in India. “In this segment, Samsung has around 15% market share for devices priced below 12,000 — and Indian OEMs account for around 4-5% of these," Pathak said.

Pathak cautioned that in case of an outright ban, Indian brands wouldn’t be able to fill this market gap in the near term. IDC’s Singh concurred that existing Indian handset makers do not have the capacity to fill such a market gap if such a ban is immediately enforced. However, he believes such a move might bring new Indian companies to the smartphone space. “But they will need massive support from the government, including financial support," he added.

Though most Indian brands have a limited presence, they have not given up on smartphones. Lava and Micromax have launched several new smartphones in the budget segment since mid-2020 after the Indo-China border conflict led to calls for a boycott of Chinese brands.

After the recent crackdown on Chinese brands, Indian OEMs, including Lava and Micromax, have been trying to make the most of the situation by “stepping up their marketing efforts" in offline retail outlets, said Manish Khatri, partner at retail chain Mahesh Telecom. Khatri, however, added that Indian brands do not have the scale that Chinese brands do in terms of shipments, though consumers aren’t averse to buying their products.

Many in the industry feel banning Chinese brands from selling devices to promote local brands is unfeasible. An industry expert said on condition of anonymity that there is no way the government can ban Chinese brands from selling phones of a certain value. Even in the case of Huawei and ZTE, the two companies were never banned. They have just created a trusted list, and the onus is on telcos. If Huawei and ZTE can clear those rules, they can sell," he added.

“How will you do that for smartphones?" he asked and answered that in phones, semi-knocked-down units come from China and are assembled here. “How will you ascertain what is Chinese?"

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

ABOUT THE AUTHOR
Shouvik Das
Shouvik Das is a science, space and technology reporter for Mint and TechCircle. In his previous stints, he worked at publications such as CNN-News18 and Outlook Business. He has also reported on consumer technology and the automobile sector.
Catch all the Corporate news and Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 09 Aug 2022, 12:40 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App