Indian brands like Micromax, Karbonn and Xolo have been very successful in capturing a sizeable chunk of the mobile phone market of the country with very attractive pricing and by providing a lot of options in almost every price bracket in low to medium range.
However most of these brands entered the market by simply getting the handsets from China and selling them in India under their brand names. However their game is now threatened with the entry of Chinese handset vendors directly, some of which are infact direct or indirect suppliers to the Indian brands. As many as 45 Chinese brands have lined up their products for launch in India.
So which group has better chances of winning in India? Here is our analysis of the strengths and weaknesses of both Chinese and Indian vendors that would decide their chances of winning.
Both Chinese and Indian brands thrive on this aspect to sell their devices. But Chinese brands here obviously have a very distinct advantage as Indian brands import their devices from China only. This gives better negotiation powers to the Chinese players who are already successful in their home market.
For instance, Chinese vendors like UMI, Zopo, Gionee are offering quad core phones for as low as Rs 7,000 while comparable handsets from Indian vendors are priced at Rs 9,999 onwards, the best example of the same is the Karbonn Titananium S1.
Chinese vendors have gone a step further by including superior stuffs like Super AMOLED Display in phones like Gionee Dream D1 which is a quad core phone and is available for Rs 15,999. On the contrary, Micromax Canvas HD A116 which though comes at the same price, does not have premium features like the other.
Same goes with UMI X2 which is cheaper than Micromax Canvas HD but at the same time offers better value for money. You can read the comparisions here and here.
R&D and Product development Capabilities
Most Indian players spend little or no amount on R&D and product development. As for them it is more like buying from China and selling in India. But bigger Indian brands like Micromax, Xolo, and Spice have invested in R&D setup and now they have capability to develop applications and services that help them differentiate their products and above all now have the size and money to up their game if the situation demands.
Having said that they are up against the likes of Meizu which has a cult like fan following in China. It invests a lot of time in developing its products with custom user interface and very powerful hardware, to which none of the Indian brands come even close. Most of these brands have been selling millions of handsets in China and therefore have a lot of muscle to push themselves in to the Indian market.
An advantage of Indian brands is that Chipset vendors like Mediatek, Broadcom and even Intel have recognised the power of Indian handset brands and are now working along with them to develop new devices. Xolo is a good example which has tied-up with Intel to come with three very differentiated and high quality products like X500, X900 and X1000 – all of which are at value for money pricing.
Having good knowledge of home market, Indian brands are also well placed to bring the right kind of products to India, but then it is a fast moving market, so a compelling product will get similar rivals in no time.
Sales and Distribution network
This is one area where it will be tough to beat the Indian brands who are well established and have a sizeable network in place.
This is one area where two of the Chinese biggies Huawei and ZTE have still not been very successful despite being their presence in Indian for over a decade now.
However Chinese vendors who plan to enter the Indian market have a strategy that can help them not just win in sales and distribution but also in terms of pricing.
A spokesperson of a Chinese handset brand also admitted the same. Talking to the Mobile Indian, the spokesperson said, “In India both sales and distribution is a costly affair, large distributors charge as much as 35 percent margin on sales and the chain below them also gets their margin which means margins at times constitute 50 per cent of the total cost of handset when it finally reaches consumer hands.”
To reach to the potential customers in India, Chinese brands have recently formed an alliance which will establish more than 200 retail touch points across the country and will also enable them to offer after sales service under AndroidGuruz brand name. And all these 45 brands will offer three month replacement warranty along with one year warranty. While this will help in having a wide distribution channel to all these brands, it will also enable them to save cost on distribution.
However this is a work in progress and will take at least 1-2 year to set up the entire network. Meanwhile they are relying in online sales through their own websites to sell their handsets. One of the biggest issue for them is to do away with apprehensions about Chinese brands (generally associated with low quality stuff). However, they are not spending much on marketing to change this image. Moreover to penetrate deeper into the market relying on just one model won’t work and ultimately they will have to tie up with local distributors.
On the other hand, larger Indian brands like Micromax has much larger footprint running into thousands of stores to sell its products. Moreover almost all the major Indian brands have tied up with large format retailers like Next, Chroma, Big Bazaar etc for sales also online presence has been take care of.
Spice has its own multi brand retail outlet though which it is selling its own products. Micromax has been opening its flagship stores in India to improve brand presence. Even new brands like Salora have more than 100 service network in India.
And while this strategy can help Chinese vendors, Indian players have already got a huge lead time and therefore can scale up their networks to retain their advantage.