As calls to boycott Chinese products are gaining momentum, can India afford to do so? No, say experts, particularly in the mobile phone segment.
Every year, just before Diwali, when the gifting season starts, there’s a clamour across India to boycott Chinese goods and buy Indian products. This has become a kind of seasonal practice over the past few years when literally the entire market is flooded with Chinese goods ~ from cards to gift items, decorative lights, candles and even diyas (earthenware lamps).
Messages requesting people to buy Indian products are sent and forwarded on e-mail as well as SMS and WhatsApp. But these messages hardly make any difference as the sale of Chinese goods swells every year. But then, there is nothing wrong in these messages as they are merely promoting Indian products. In fact, every country does so to safeguard their local businesspeople. But the big question is, is India in a position to boycott Chinese goods, given their penetration in every sector? Going by what facts and figures claim and experts opine, no.
Due to their low price and easy availability, these Chinese products have successfully carved a space in the Indian markets. In other words, it would take a lot of effort to replace these products with Indian ones. Take for instance, the mobile industry. As per the Counterpoint Research, four out of five smartphones sold in India are Chinese. The only non-Chinese company that falls in the bracket of top seller is Samsung. The other Korean tech giant LG or Finnish mobile maker Nokia have failed to make any impact in the Indian market so far. Even Taiwanese like Asus are hardly able to give any competition to these Chinese tech giants. Similarly, Indian mobile makers like Lava and Micromax, don’t even find a place in the competition. This just shows the extent of Chinese companies’ penetration in the Indian market.
What do experts say?
Whenever anything untoward happens with China on the border or on a global forum, these “Boycott China” discourses take centrestage. This time, the killing of 20 Indian soldiers by Chinese has created a lot of uproar in India and the campaign to shun Chinese products is getting a lot of traction. Images of people breaking their Chinese television or gadget as part of the campaign were flashed all over. The campaigners claim this would eventually make an impact on China’s economy and it would stop its misadventures on our borders. However, this does not resonate with experts, who think otherwise. They opine that these kinds of exercises will only hurt Indian business as lots of people are employed or connected with it. While a few said it won’t sustain beyond a few weeks as Indian buyers have no other options, others noted that it may make a difference in the long run, not right now.
“There is a strong anti-China sentiment on ground and emotions are running high. It’s understandable,” said Prabhu Ram, Head-Industry Intelligence Group, CyberMedia Research (CMR) . For some consumer cohorts, it may translate into actually boycotting Chinese mobile phones. However, it will take years of policy interventions in India to build the value chain and enable a 100 per cent ‘Made in India’ phone. The Chinese mobile brands have invested strongly and leverage capabilities in local manufacturing, R&D and innovation in India.” Therefore, boycotting Chinese goods can backfire now.
Smartphones in India
BBK, a well-known Chinese company that owns Oppo, Vivo, Realme, OnePlus and Iqoo, all of which sell their smartphones in India, along with other Chinese companies, share 72 per cent of the market in India. If one goes by facts and figures, it would also go against this discourse of boycotting Chinese products. India’s smartphone shipments grew a modest 4 per cent year-on- year to reach a little over 31 million units in Q1 2020, according to the latest research from Counterpoint’s Market Monitor service. Around 33 per cent mobile shipment in India is dominated by Chinese mobile makers, up from 17 per cent in Q1 2019. In fact, these mobile brands are getting stronger in Indian markets every year. Among mobiles companies, Xiaomi has grabbed 30 per cent of the Indian smartphone market in Q1 2020, achieved a 6 per cent year-on-year growth. Xiaomi, which deals in mid or budget sections, recently entered the premium segment with the launch of MI 10.
Vivo, another Chinese brand, with 17 per cent share in mobile phone market, has grabbed second spot in India. It has witnessed 40 per cent growth in sales from 2019 (Q1). Then comes, Realme, a sub-brand of Oppo. It has captured 14 per cent of the Indian mobile phone market. The company has witnessed huge growth in Indian market ever since it was launched. It recorded 114 per cent growth from last year. Recently, it came up with another series, Nazro, and also entered the television segment. Oppo, another Chinese brand, has captured 12 per cent in the Indian mobile phone market. Another Chinese mobile phone maker, OnePlus, is growing very fast in the Indian market, mainly in premium section. However, it couldn’t make its space in the top five but is doing really well in premium section. OnePlus usually launches its phone priced around Rs 40,000, receives outstanding response and gives tough competition to Samsung and Apple.
This was the story of Chinese tech giants dominating Indian markets. The only non-Chinese company in the top five position is South Korean tech giant Samsung. With 16 per cent share in the Indian market, it grabbed third spot. But it is witnessing a downfall in sales, as per Counter Research. Last year, it was 24 per cent in the Indian market. Another non-Chinese company doing well in India is Taiwanese tech brand Asus. But it is unable to give competition to the Chinese nexus. The same is the case with the once highly popular Finnish brand Nokia that is still struggling in Indian markets in the smartphone category. South Korean brand LG also couldn’t manage to persuade Indians to buy their products. Thus, these brands are unable to make any significant presence in the Indian market. Other than the mobile phones, India is also highly dependent on components imported from China. Upasana Joshi, a lead analyst for mobile phones, India and South Asia at IDC, said we are going to depend on China or Taiwan or Korea for key components at least for the next few years. Currently, only parts like batteries, chargers and packaging materials are locally sourced.
“All the major components (for manufacturing a smartphone) are sourced from China and are only assembled in India. The three most important components of manufacturing a phone are chipset, memory and display, of which the first two require high-end technology, uninterrupted water and electricity supply and very skilled manpower to run the automated machines in a closed and vacuumed environment,” says Upasana Joshi.
Indian mobile makers have lagged far behind in competition. Micromax was the leading smartphone brand in India around 2015-16. According to Canalys, the Indian company was soon overtaken by Samsung in Q4 2015. The arrival of Chinese brands and their aggressive marketing led Micromax to struggle. The same is the story of other Indian brands like Lava. But the hearty news is that these brands are doing really well when it comes to feature phones.
Micromax has captured 7 per cent share in Indian mobile phone market while Lava has 21 per cent market share in feature phones. But one has to begin from somewhere and provide an alternative to these Chinese products. Therefore, Mircromax, in one of its tweets, indicated that it is soon coming up with something big. Union telecom minister, Ravi Shankar Prasad, tweeted that India recently emerged as the second-largest mobile phone manufacturer globally with more than 200 mobile phone manufacturing units operational in the country. These are indicators that something can be done, at least in the mobile phone sector, if not in all others.
This article first appeared in The Statesman on 23 June 2020.