Chinese Now "Make In India" – And Why Indian Mobile Companies are Alarmed

While #boycottchinaproducts has in recent days been a populist belief in India, a major market chunk of technology here, especially smartphones, is still dominated by Chinese products. Chinese companies are acquiring, or venturing with, Indian mobile manufactories to benefit from Make In India and giving native companies a tough fight.

India has become the second most favourable destination for Chinese mobile manufacturers. Since the beginning of an economic slowdown and saturation in their domestic market in 2013, Chinese mobile companies have been eyeing international turfs. Chinese consumers, now, have sophisticated and complex demands while costs and wages are on a rise. Meanwhile, the Indian mobile industry is foreseen to become the second biggest by 2017 with sales of a projected 174 million units.

India is easily penetrable as both Indian and Chinese markets have similar structures. Being a Free-Market, distribution in India is easy and the boom of e-commerce has allowed big players like Lenovo and Xaiomi to cement their position here. Additionally, India & China share same 1800MHz & 2300MHz 4G frequency bands, which means any Chinese 4G enabled phone is supported in India, too. Cheap 4G phones have allowed the Chinese to put their feet down in the Indian market.

Motorola, with the launch of Moto G in India in an exclusive partnership with Flipkart, set the stage for other International affordable smartphones manufacturers to enter the Indian e-comm arena. Invoking users’ curiosity by online flash sales, Motorola gained much success with several generations of Moto G, X and E, within mere two to three years. This online-only business model in which logistics were handled by the e-retailer, charmed most existing Chinese brands into India.

http://www.hindustantimes.com/tech/andhra-cm-xiaomi-vp-hugo-barra-to-launch-made-in-india-phone/story-I50k2jYL6RLKAXMu1GCr0H.html" align="aligncenter" width="478"> Xiaomi's part in Make in India

It wouldn’t be an understatement to call India’s online marketplace a captive of Chinese smartphone makers. With recent relaxation in FDI norms and the Indian Government’s initiative of Make in India, as many as 25 mobile phone makers including Xiaomi, Lenovo, Oppo, Oneplus, Gionee, LeEco and Huawei either have or are likely to start manufacturing in India soon.  Additionally, imported phones attract a duty of 12%, which domestically manufactured phones are exempted from. This will empower India to become the next big manufacturing polestar, creating several thousand job opportunities. On the downside, a major chunk of this revenue is likely to swell pockets of Chinese stakeholders. The union of Indian production and Chinese technology, nevertheless, offers a high learning potential, both in terms of attention to innovation and cost-effective craftsmanship.

The only smartphone maker guarding Indian front against Chinese competitors is Micromax. It created a realm of trust for local manufacturers but faced a huge blow from the effect that it created, as most Chinese brands prospered from this advantage. Thereupon, Micromax’s share in the market halved. However, to tackle oriental competitors, the second Yu smartphone was launched with a badge of “Made in India.” Simultaneously, other notable Indian brands like i-Ball, Lava, Spice, Karbonn have failed to garner much appreciation in and outside India. Sub-standard build quality, sleazy circuits and reluctance towards updated firmware have restricted these brands to a niche of elementary Androids.

Chinese manufacturers have, clearly, an edge over Indian rivals in terms of expertise, innovation and quality. Most new launches by Indian makers are fixated on the sub-5k segment. Micromax is looking at a change with Yu's venture into the affordable flagship (sub-12k) segment, whereas the Chinese makers are already challenging full-fledged flagships with leading launches like the Oneplus 3, Xiaomi Mi5 and the sensational Asus Zenfone 3 Deluxe. Although, Indian startups like Tendulkar-funded Smartron and Creo have tried to change the game, but are yet to taste success.

Chinese smartphone producers are sitting comfortably in this chair, which is unlikely to be emptied any soon. The success for Indian corporations, especially ahead of their Chinese peers, lies in creation of a new seat. Low penetration of feature-rich smartphone in the average Indian household is a key driver of growth and an area which requires dedicated focus. Most off-shore manufacturers lack good after-sales support and this is a tough nut which Indian makers must crack to seize control of the market, which is a long journey forward.