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Two Sided Indian Mobile Phone Market

2021/1/12 12:26:00 85

Mobile PhoneMarket

"It's perfectly normal, and it's going to be there." Zhang Li's tone was calm when he mentioned the protest of Apple's supply chain employees in India, which caused considerable repercussions. "There will be similar things in these developing countries." He added.

In late December 2020, Wistron, one of Apple's OEM factories in India, suddenly encountered a public protest from local employees and took drastic actions. According to local media reports, this caused a loss of nearly $7 million. Subsequently, the local government and apple have been involved in the investigation. The development prospect of mobile phone industry chain in India is once again shrouded in pessimism.

Looking back to the whole year 2020, the development of mobile phone industry chain in the local area is not smooth: Customs card deduction, sudden new crown cases in factories, consumption tax adjustment, national sentiment and other events have emerged one after another.

However, the status of Chinese manufacturers is still unshakable. According to the statistics of canalys, a third-party research organization, as of Q3 of that year, Chinese manufacturers accounted for 76% of the total number of smartphone shipments in that quarter, up 2% year-on-year.

Variables are also emerging. Based on Samsung's long-term accumulation and adjustment in the local market, during the year, as the only top manufacturer in the local market that was not from China, Samsung finally overtook Xiaomi and regained its position as the market sales champion in some quarters. Apple, with the help of the iPhone Se series, has a strong momentum in India.

However, "out of stock" has become a core proposition faced by all manufacturers most of the time. Many industry insiders have told the 21st century economic report that although the marketing strategy has been adjusted under the influence of national sentiment, the strong market demand led to the shortage of supply almost throughout the next stage after the Indian blockade was lifted.

This is also the reason why it is difficult to ignore the Indian market in attracting the mobile phone industry chain: even in the context of the new crown pneumonia epidemic sweeping the world, India's mobile phone market demand still has the prospect of sustained high growth; even the global mobile phone giants Samsung and apple are actively stirring the dynamic balance of the industry.

India's positive and negative aspects test the adjustment ability of all mobile phone industry chains.

variable

At the beginning of 2020, Zhang Li, who had been in India for more than three years, soon realized that his market needed rapid adjustment after hearing about the spread of new crown pneumonia in China.

In March 2020, he held an internal meeting to give all local employees two choices: to accept the next half cut in the salary of all employees and be ready to "spend the winter"; or they can leave voluntarily. For those who choose the latter, the company will pay the full salary.

As expected, nearly half of the staff of the team have left. Looking back, we have to say that this choice is correct.

Zhang Li is one of the channels for mobile phone manufacturers in India. In 2020, because of the local national sentiment for a period of time, he did not dare to carry out operation and investment in 2C market for a whole year, and only continued the previous strategy for 2B market. Although in the local exuberant consumer sentiment, 2b channel has obtained the good income, but the synthesis is not so good-looking.

"The overall impact is quite big." He told the 21st century economic report that, as early as 2019, he had made a new round of product planning: high subsidies, pulling new ideas and other playing methods have been completed and will receive the fruits of 2020.

But once the 2C platform is stopped, even if there are still orders, the overall number of users still has a large loss. "I'm not only selling goods, but also users and data. In other words, there is no investment in this area this year, which means that the amount of data is lost, and the previous year is a white accumulation. " He lamented that in such a market, we can only rely on the efforts of local top-2b partner platforms such as Amazon to balance the loss as much as possible.

The corresponding adjustment is also continuous. "In the e-commerce platform, I reduced my investment. More than 100 million yuan was invested in 2019, and only a few million yuan was invested in 2020, which is a major reduction. This also takes into account the influence of some external unstable factors. " Last year, he continued, he sent his Chinese operations team back to India, leaving only customer service personnel in India.

Since he has not returned to India for a year, Zhang Li also added managers to the local team in May last year to coordinate the situation, so as to keep an eye on the situation and hope to make the fastest response.

To reduce marketing investment to a certain extent is also the response measures that most Chinese mobile phone manufacturers will take under the fluctuation of local national sentiment last year.

Prachir Singh, senior analyst at counterpoint research, analyzed to the 21st century economic report that the Wegener event had limited impact on the overall investment process of China's mobile phone industry chain companies. "Nevertheless, for all the manufacturers who have further built the mobile phone industry ecology in India, it means that they need to closely follow up and implement India's labor policy."

Although so far, the two sides of the Indian market lie in that it is still the intelligent machine market with huge demand potential all over the world.

Out of stock

After experiencing the second quarter low due to the closure of the country and short-term restrictions by customs, the Indian market turned to usher in the "strongest" sales season in the third quarter.

According to counterpoint, the third quarter of 2020 is the highest quarterly shipment in India's smartphone market.

In the third quarter of 2020, India's smartphone shipments grew 9% year-on-year to more than 53 million units, prachir Singh told the 21st century economic report. This growth was driven by brand manufacturers, coupled with previously pent up demand. And because of the worry about new crown pneumonia, consumers prefer online platform.

"Demand has declined after Diwali festival and we believe that shipments will return to normal in the next two months," he said

Channel level is also obvious. Zhang Li told the 21st century economic report that through communication with several key channels, it can be found that some months in 2020 also reached a record high in the history of transactions.

For an explanation, Diwali is a very important festival cycle in India every year, which is generally around October, which can be called "Diwali festival" in Chinese. At the same time, it is also a big month for e-commerce to promote every year. The transaction activity is similar to the promotion period of double 11 in China. Generally, transactions during this period can account for at least 1 / 3 of the annual turnover.

"According to my platform statistics, both Xiaomi and realme can almost be said to be blowout growth, and 2020 is almost double the level in 2019." He further analyzed, but this can not be regarded as "retaliatory consumption", but a centralized purchase of demand.

However, at the other end of the booming demand, it is the "shortage" caused by the shortage of supply, which has become the core keyword throughout the second half of India's smartphone market.

Although Liu Yang is in China, he still frequently receives calls from Indian partners recently, demanding to increase equipment.

"As soon as I was on the plane, a partner asked me for 150 sets of equipment, and a machine would cost about 200000-300000 yuan." He told 21st century economic report that demand has been strong recently.

"Of course, we have to balance it. This is because there is a large demand for mobile phones, but the supply of manufacturers is not so fast. It is not only the lack of equipment, but also the lack of various raw materials. So relatively speaking, my business can only be said to be stable, not explosive growth. " Liu Yangxu said that for this reason, he also increased the salary of his subordinates, because he could not return to India, "it's all up to them to help me deal with everything."

There are many reasons for the shortage. Counterpoint analyst Tang Ding recently pointed out to the 21st century economic report that due to semiconductor capacity constraints and the priority to ship Huawei in the second half of last year, a variety of upstream components were in short supply. The increase in demand of mobile phone manufacturers in the fourth quarter further exacerbated the imbalance between supply and demand of some parts.

Prachir Singh analyzes that in the Indian market, the problem of supply shortage may be short-term and will subside in the first quarter of 2021. Especially after Diwali festival, changes in demand will gradually reduce the pressure on OEM manufacturers.

Wang Shuo, head of India brand marketing at realme, told the 21st century economic report that almost all head mobile phone manufacturers had achieved good sales results in 2020. "Because the supply chain management ability of small and medium-sized brands is relatively weak, the head brand will have more advantages. Therefore, the volume of each company will be better than that in 2019, of course, the overall market size may not change greatly. "

"In 2020, realme achieved a month's sales of Diwali in the first week of the previous year." He added that realme's sales in India will almost double in 2020, but due to the shortage of supply chain, the growth rate of India's mobile phone market is expected to generally slow down in 2021, but it will also start to pay attention to the sales of other aiot products.

Pattern shock

Indeed, the undercurrent began to surge. In the second half of 2020, the role of players in India's smartphone market has changed slightly.

Under the high demand and changeable national sentiment, Samsung and apple are the more obvious variables. According to counterpoint statistics, from the perspective of smart phones, Samsung surpassed Xiaomi in Q3 in 2020, and took the top selling position again after two years. From the point of view of broad sense telephone, Samsung has already been the first.

Prachir Singh told the 21st century economic report that Samsung has become the leading brand in India's smartphone market with a 32% growth rate in Q3. "It is the fastest recovering manufacturer, exceeding the level before the Q3 new crown pneumonia epidemic in 2020. This strong performance is the result of multiple strategies, including an effective supply chain and reaching various prices through new product launches. At the same time, Samsung is actively entering the online channel, and the contribution of online channel sales to it has reached the highest level in history, which also helps it regain the first place position. "

The variables in the high-end market come from apple. According to canalys statistics, Apple's growth momentum in India resumed in the third quarter, achieving double-digit growth, reaching nearly 800000 units.

Rushabh Doshi, research director of the agency, said, "Apple has finally turned its attention to India. It has opened a direct online store, giving its product entry strategy several new perspectives, such as using a replacement phone to promote buying motivation, or bundling airpods with iPhones to enhance attractiveness. However, the iPhone 12 series will be hard to sell in India in 2020, as network operators do not yet have the infrastructure required to deploy 5g, a key feature of the new iPhone, and consumers will not be able to enjoy 5g, a key feature of the new iPhone. Apple's pricing strategy for its new iPhone in India needs to be carefully considered. "

Prachir Singh believes that Apple's leading position in the high-end market (about $400) is driven by strong demand for the iPhone se 2020 and iPhone 11, surpassing oneplus even before the launch of its flagship product.

"We believe that Apple will witness the growth of shipment in 2021. Because Apple will be active in channel strategy; in addition, in 2020, we will see Apple's most active release rhythm in the history of the world, which will turn into an opportunity for India at some point in time. As more partner manufacturers accelerate their landing, India's local manufacturing industry will accelerate, which will improve India's iPhone delivery capacity. And apple has always been a desirable brand for Indian consumers. " He told the 21st century economic report.

Mobile phone giants have shifted their focus of competition to India, which is undoubtedly driven by local demand.

Wang Shuo said that it is expected that the Indian market will still have a high growth trend in 2021. This is because mobile phones have become a necessity for Indians to survive the epidemic, which is almost the only channel for local people to live and socialize at home.

But there are still worries. "What I'm worried about now is that high-end products will not be sold well in 2021, and your consumption power may be weakened due to the epidemic situation and economic impact," he told the 21st century economic report

Statistics of the third-party organizations show its clue. According to IDC Research Report, in the third quarter of 2020, the average price of smart phones in India fell by 2% year-on-year to 156 U.S. dollars, of which 84% of the shipments were under $200. The year-on-year decline in the mid tier market (below $200) was due to economic uncertainty and consumer reluctance to upgrade to more expensive smartphones.

(Zhang Li and Liu Yang are pseudonyms)

 

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