Not easy for local phone companies to match China peers

NEW DELHI: Local handset makers Lava, Micromax and Karbonn will need to invest heavily on product innovation and intellectual property to compete with dominant Chinese brands, analysts said, adding that the anti-China rhetoric is unlikely to bring any meaningful gains to these companies unless they get state support.

All three local players are planning to re-enter India’s highly competitive smartphone market that is dominated by Chinese handset brands – Xiaomi, Realme, Oppo and Vivo.

With launches in the sub- Rs 10,000 price segment, the local brands are seeking a meaningful market presence.

The share of local brands stood at 1% in the smartphone market in the January-March period against 81% for the Chinese brands, according to Counterpoint Research.


Tarun Pathak, associate director at Counterpoint Research, said that R&D is one of the key areas where local brands need to improve to scale up and grow in the future.

“The hardware will be commoditised and they need to find ways to monetise the same and stay profitable, which means they will need to look outside just the entry level users and look at differentiation from the software standpoint as well,” Pathak said.

Navkendar Singh, research director at IDC, said that a comeback from local brands seems tough. “They need better support from the Indian government, like incentives or cheaper funds under some scheme. Else, there is no way they can compete with China-based brands in terms of marketing and channel spends.”

He added that to ride the anti-China wave in India, handsets of local brands logically need to be fully made in India, which is not possible for the next few years. “We have to set up a full value chain in India from displays and chips to chargers and cables,” said Navkendar Singh. “The capability to assemble at scale for someone is not difficult.”

Faisal Kawoosa, founder analyst at TechArc, said that acceptability of Indian brands is negligible in Rs 10,000 and above price segment even when the growth is happening in the mid-segment for smartphones.

He added that among local brands, Lava is much ahead in terms of design capabilities and already has some momentum in the market.

“Lava has done a good job in design and has deeper capabilities, and invested in product development and R&D capabilities,” Kawoosa said.

Lava plans to shift its export manufacturing base, R&D and design from China to India this year and will invest Rs 80 crore for the transition.

It will invest about Rs 800 crore over the next five years toward this transition.

Not easy for local phone companies to match China peers Not easy for local phone companies to match China peers Reviewed by TechCO on 7/12/2020 Rating: 5

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