Has the Anti-China Sentiment Derailed Smartphone Makers’ Goals?
Chinese smartphones in India account for almost 71 percent of the market.
A majority of the Indian smartphone users today are using Chinese smartphones which, as of June 2020, was at 72 percent. But that figure three months ago stood at 81 percent, as per a Counterpoint Research report.
There has been a year-on-year (YoY) drop in the shipments of Chinese smartphones in one of the largest smartphone markets in the world and that’s not a good sign for brands like Xiaomi, Oppo, Vivo and Realme among others.
Is this drop a need for worry for Chinese brands and how are non-Chinese counterparts making the most of what’s transpiring in the Indian smartphone market? Let’s dig deeper.
How Chinese Brands Performed in Q2 2020
The overall smartphone market in India saw a 51 percent YoY decline in Q2 2020.
Most smartphone brands across the market suffered a drop in shipments except Apple who, thanks to the success of the iPhone 11, managed to register profits. There has been no relief for Chinese brands.
As per a Canalys report, market leader Xiaomi regained its top spot with a 28 percent market share but saw a 48 percent drop in annual growth. As per a Canalys report, the Chinese smartphone maker managed 5.3 million shipments in Q2 2020 while at the same time last year it had shipped 10.3 million units. These also include the shipments of its sub-brand Poco.
Models like the Redmi 8A dual, Redmi Note 8 Pro, and Redmi Note 8 continued to be hot sellers due to the competitive price tags, strong value propositions, and good channel reach.
Vivo has suffered a 36 percent drop in shipments in the second quarter of 2020. In Q2 2019, Vivo managed 5.8 million shipments which dropped to 3.7 million this year.
Not to mention that the brand has had to suffer the brunt of the anti-China sentiment as it was suspended as the title sponsor of the India Premier League for this season.
Oppo managed to beat rival Realme second year around with 2.2 million shipments recorded in the second quarter this year. The brand that has a 12.9 percent market share in India succumbed to a 27 percent drop in shipments compared to last year in Q2.
According to Counterpoint Research, OnePlus regained its top position in the India premium smartphone market with a 29 percent share in Q2 2020, just nudging out South Korean brand Samsung.
The launch of its latest flagship, the OnePlus 8, along with a price cut on the OnePlus 7T series helped the brand in recapturing the top position.
Realme, which claims to be an India startup brand but is a Chinese smartphone manufacturer based in Shenzhen, suffered a 35 percent drop in shipments for Q2 2020 with just 1.7 million units shipped.
Despite the drop, Realme has been able to better its market share in India with 10 percent which was 8.1 percent last year.
We have also done a detailed story on the slump of the smartphone industry in India for the year 2020 which you can read here.
Road to Recovery
Despite a 9 percent YoY drop in smartphone shipments for Q2, manufacturers are not perturbed as forecasts predict that sales will be back to normal in the festive period during Q3.
It’s just not the anti-China sentiment but the slowdown of the entire industry that’s caused the drop in shipments as well. Samsung (which is not Chinese) also saw a steep de-growth in shipments for Q2 this year.
We reached out to Chinese smartphone makers in India like Xiaomi, OnePlus, Oppo, Honor, Vivo and Realme for a comment on how they see things unfolding from here on. None wanted to comment.
Market analysts and experts are seeing a rise in demand which is sure to boost the shipments in the coming days.
Brands like Xiaomi and OnePlus are bullish about the Indian market and are sure to come up with an attractive product line for the future.
The recently introduced OnePlus Nord is an example of how OnePlus is looking to dive into the mid-range market to gain more customers.
Xiaomi has also introduced updates to its budget devices in the Redmi series which till now have been a hit.
Vivo which has a strong offline presence and has adopted new offline retail strategies to sell smartphones at the customer’s doorsteps. As offline channels start to reopen, the company can expect to see a turnaround in the next quarter.
What About Substitutes?
You also have to take it into account that there aren’t enough substitutes in the market that can challenge what the Chinese smartphone makers can offer.
Samsung and Apple have a strong presence in the premium segment but fail to impress in the sub-15k category, which is the most sought after segment in India.
Indian brands like Itel, Lava, Karbonn among others have been swept aside by the Chinese invasion and have shifted focus to feature phones.
So, until non-Chinese companies start providing better substitutes it’s unlikely that the demand for budget-friendly and spec-heavy Chinese phones will fall.
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