Our country had 1.2 billion mobile subscribers in 2021, of which around 750 million are Smartphone users. Again Bharat is the world’s second largest mobile phone manufacturer after China. And we can assume that with the current pace of growth, we are not far from becoming the world’s leading handset market. According to the Indian Cellular Association (ICA), the annual production of mobile phones within the country has increased from 03 Million devices in 2014 to 173 Million mobiles in 2021. Bharat now accounts for 22 percent of global mobile production with India’s smart phone market revenue crossed USD 38 billion in 2021 with 27% growth in comparison to 2020. Today the telecom industry is one of the top five employment creators in our country.
Worth mentioning here is the fact that despite its huge market and enormous manufacturing capacity Bharat, is still waiting for its own strong mobile brand. Chinese Mobile Phone Companies like Xiaomi, Realme, Oppo, Vivo, Motorola, Lenovo, Huawei are giving tough competition to well established brands like Samsung and Apple iPhone, while Bhartiya Mobile Phone Brands Like Micromax, Lava, Karbonn, Intex, Reliance LYF are not doing as per expectation even in their own domestic market. Currently, the top 10 Mobile Phone brands in India of this year are 1. Xiaomi (26.46%); 2. Samsung (17.35%); 3. Vivo (15.09), 4. Realme (12.29); 5. Oppo (11.53); 6. Apple iphone (3.93%); 7. OnePlus (3.55%); 8. Unknown Brands (1.52%), 9. Motorola (1.33%); 10. Huawei (1.08%) and unfortunately none of these is a Bhartiya mobile brand.
It’s a fact that to be ‘Atma-Nirbhar’ (self-reliant) in any field especially in technology, we will have to invest our own investments, increase spending on R&D and focus on skilled labor will be a good start in this direction.
To increase its own market share, Chinese mobile makers have been implementing umbrella branding strategy. This strategy allowed them to follow different approaches for different product lines. Again to counter new policies introduced by the government of Bharat, they have localized their production. This has made Bharat the second biggest mobile manufacturer after China but there are some side effects of the same achievement. Now almost all renowned mobile brands are manufacturing their sets in Bharat. But it has also hindered the growth of Bhartiya mobile brands.
Bharat has banned Chinese Smartphone makers from selling devices cheaper than 12,000 rupees ($150) to kick start its faltering domestic industry. This decision has threatened Chinese brands like Xiaomi which has 26 % share in the Bharatiya Mobile market. Smartphones under $150 contributed to one third of Bharat’s sales volume for the quarter through June 2022 with Chinese companies accounting for up to 80% under this segment.
“Xiaomi smartphone shipments may fall by 11-14% a year, or 20-25 million units, with sales decreasing by 4-5%, we calculate, if India enacts a ban on China-made mobile phones retailing under $150. It accounts for 25% of the segment in India, which is Xiaomi’s most important overseas market, with 66% of its smartphones priced under $150, according to IDC”
– Steven Tseng and Sean Chen, analyst
Once Bharatiya Indian mobile makers like Lava and Micromax accounted for half of India’s smartphone sales before new Chinese companies disrupted the market with cheap and feature-rich mobile phones. Bhartiya brands like Micromax, Lava, Xolo, Karbonn, Spice and Intex. All these companies were doing well before 2014. At least they were not incurring losses. Micromax and Karbonn were the leading companies in 2014. These companies were also sponsoring several cricket series. At that time Xiaomi, Oppo and Vivo were still in the early stages. And Samsung, Micromax and Apple were ruling the mobile market. The market share of Indian smart companies has shrunk to less than 2% in the last 6 years. Surprisingly, despite the political tension between Bharat and China, Indian companies could not take advantage of this situation.
It is relevant to mention that Micromax once overtook mobile giant Samsung in 2014. Unfortunately it could not maintain its momentum. And during this time Chinese mobile makers were entering the Bhartiya market. The decreasing trend of Bhartiya mobile manufacturers in the Bharat mobile market can be seen as: 2015- 16 %, 2016- 11%, 2017- 5 %, 2018- 5 %, 2019- 1 %, 2020- 0.2 %. This is seriously disappointing trend. Despite Maha-Amatya Modi’s call for ‘Vocal for Local’ and ‘Make in India’ campaign, Bhartiya mobile makers are unable to take the lion’s share of their domestic market. It is disgusting, how will we make the dream of ‘Self-reliant India’ a reality without getting our real share in all the spheres of the business world including the mobile manufacturing industry. Perhaps this is the reason why the former Vice President and MD of Xiaomi India dares to say that the boycott of Chinese products is only on social media and it is a result of mob mentality. Though this statement is totally unacceptable, but it clearly reveals some hidden messages. Now the question arises why Bhartiya brands lag behind their foreign counterparts? What are the main reasons?
Bhartiya smartphone companies have not done anything new that can be compared with Chinese companies. When Micromax, Lava and Karbonn had enough money to invest in manufacturing plants, research and development, they could have started their own software companies which would develop inbuilt innovative features but they did nothing. Not only this, they were getting their devices from China. Our Bhartiya companies just wanted to make money as quickly as possible. But, this idea has completely failed. Most Bhartiya Smartphone brands were operating on 20-30% profit margin. That’s much more in comparison to Chinese players. Xiaomi is still making less profit because they want to create market, where consumers love their products. All the Chinese brands are operating their business on only 5% profit margin. Chinese companies work on the basis of economic of scale that means they manufacture millions of Smartphone and eventually reduces the overall cost of manufacturing. This is the main reason why Chinese companies are able to sell their Smart phones at lower prices. Bhartiya players will have to understand this basic principle of production.
We cannot blame the initiatives taken by the government. During the Corona period we were expecting that after this epidemic Bharatiya Mobile brands would come up with new strategies and new plans but nothing happened in 2021 & 2022 as per general expectation. To counter the ‘Make in India’ campaign, Chinese companies started creating assembling plants in Bharat. And it has been proven beneficial for them as it decreases tax and transportation costs of Chinese companies. Bhartiya brands couldn’t understand this and they keep manufacturing their products in China. This is also a bitter truth that Bhartiya Smartphone brands don’t have their own manufacturing plants. All the companies were buying phones from Chinese manufacturers and selling the phones by just branding the phone. This way they are losing the trust of Bhartiya customers. Again when 4G was introduced, Bhartiya companies were not ready for it. And Chinese players took advantage of this and they captured the market. We will have to seriously look into the ongoing technological developments and ever changing demands of consumers.
Now a question arises, what can be done to combat with this challenge? Firstly we should reduce imports and localize manufacturing. This has been achieved to an extent, though not satisfactory. Going forward, the cluster manufacturing model allows for the development of interconnected products and resources in any particular area. Again, once companies are in recovery mode, investments in research and development in this direction should gather momentum. We will have to understand that only a cost-effective and discounted strategy is not enough. Innovation is also vital to emerge as the new brand to grab onto the consumers and earn their loyalty. If Industry 4.0 was in the limelight before the crisis, its importance for giving businesses a competitive edge and spurring innovation would only make a greater impact in the post-crisis world. Government is also planning to setup Semiconductor Manufacturing Plants in Bharat. More than 20 semiconductor manufacturing and designing companies in high-end, display and specialty fabrication have reportedly submitted Expression of Interest (EoI) for setting up manufacturing plants in our country. Mobile manufacturers of Bharat should take advantage of this opportunity to become self-reliant in this field.
To increase its own market share, Chinese mobile makers have been implementing umbrella branding strategy. This strategy allowed them to follow different approaches for different product lines. Again to counter new policies introduced by the government of Bharat, they have localized their production.
Here we need to note that in today’s world depending on a globalized economy, 100 percent indigenization is impossible. We depend on not only China for components, but also the US, Japan, South Korea, Taiwan, Vietnam and many other countries. It’s a fact that to be ‘Atma-Nirbhar’ (self-reliant) in any field especially in technology, we will have to invest our own investments, increase spending on R&D and focus on skilled labor will be a good start in this direction. Reliance Jio has started working on it. In the coming years, all the Bhartiya mobile brands should seriously consider the above mentioned points and work accordingly to get the major share in the Bhartiya mobile phone industry. Money lending companies should also think on this matter and try to support Bhartiya mobile companies by providing more attractive deals especially for Bhartiya brands. Again mobile manufacturers should need to realize that profit is not the first step of business but it’s the final objective of business. We will also have to understand the demand of all segments of the market and have to learn from the mistakes made by big giants of the same industry in the past and also to take the adoption curve, if required.
“We have not lost, we missed the bus. And now a new bus is coming” Mr. Sunil Raina, President and Business Head, Lava International is confident that Bharatiya smartphone companies will make a strong comeback even after losing the first inning to the Chinese mobile makers.