The increasing strength of Chinese mobile phone manufacturers in smartphone market is reflected in the 3.4x growth in market share to 51% in 1QCY17 (International Data Corporation’s: IDC Quarterly Mobile Phone Tracker).
There is a complete change in the market position of the top five smartphone players in FY17, as Micromax Informatics, Lava International Ltd., and Karbonn Mobiles Pvt Ltd were replaced by Xiaomi Inc., Vivo Mobile India Private Limited’s and Oppo Mobiles India Private Limited’s. Though Samsung remained the market leader with 28% share in 1QCY17 (1QCY16:25%), the share of Indian vendors downsized to a mere 14% (40%). Lenovo also sustained its position due to the established brands and products in the diversified price segments. Oppo and Vivo India have recorded sales increases of 7-9 times over FY17 respectively. India Ratings expects Vivo India and Oppo’s smartphone sales to grow by around 40%-50% over FY18.
1. Strong brand through substantial advertising expenditure and sales channel building funded by the sponsors.
2. Chinese smartphone makers enjoy a debt-light capital structure and healthy liquidity due to the long payable period extended by their suppliers.
3. Better technological capabilities of the Chinese players leading to superior product offerings have also contributed to their success.
4. Furthermore, large investments by Chinese players towards brand building and manufacturing facilities in India depict their long-term strategic intent.
Figure 1- Chinese Mobile Companies have increased their market share from 15% in (Q1 2016) to 51% (Q1 2017). Mind-boggling.
Figure 2- VIVO Mobile is projected to clock $2.01 Billion in FY 2018 from a meager $ 0.13 Billion in FY 2016. A 13.55 Times or 1355% Revenue growth in Just 2 Years.
Yogendra Shah – Head- Client Advisory at SNMA Enterprise Pvt. Ltd