Vietnamese smartphone brand Mobiistar had entered Indian market exactly one year back and is now bracing itself for tough times ahead as its manufacturing partner will be initiating bankruptcy application process from next week in China due to losses in India.
Mobiistar had partnered with Shenzhen (Guangdong, China) based contract manufacturer V-Sun Technologies (Shenzhen Wenshang Communication Technology) to manufacture its smartphones that would be sold in India.
When we contacted Mobiistar India to understand their side of the story, they said, “We are not aware of any such development and haven’t received any communication.”
The Mobile Indian has learnt from sources familiar with the development V-Sun will be filing a bankruptcy application in China next week. We even have the copy of the email that Zhang Xueying,founder, Shenzhen Wenshang Communication Technology had sent to his employees.
It read, “We are unable to pay the wages of the next month because of the broken capital chain. Please understand and take out the resignation procedures and re-employment as soon as possible so as not to affect the social security and the future.” [It’s an English translation. Original Email was sent in Chinese]
The breakdown in the capital which Xueying is referring to in his email is the losses which Mobiistar has suffered in the Indian market. He wrote, “[our] mobile phone Indian brand has suffered a total loss of 150 million yuan from 2018 to April this year.”
He also asked his oversees employee to get in touch with the administrative department to assist them to return home as soon as possible to ensure that they return home safely. He also requested the financial department to inform the bank that the loan which the company has taken will be deferred.
As per the email, customer and partners like Mobiistar who have placed an order with V Sun will also to be notified in coming days that the company will be unable to deliver the product from next week. Sources in the Mobiistar India said to us, “The development might not affect the smartphones launches which are going to happen next month as we already have received the shipments.”
When we enquired about the future prospects, we were informed, “If VSun does go ahead we will face supply issues going forward and may have to quickly think about an alternative strategy.”
Xueying further wrote, “From next week, the company will start the bankruptcy application process. I hope that my colleagues will understand and cherish it! I know that I am sorry for everyone and all the suppliers and partners, but I still have to say: Sorry!”
Shenzhen Wenshang Communication Technology Co., Ltd. was established in May 2011. The company is located in Shenzhen, India and Dubai. It has more than 2,000 employees and more than 300 R&D personnel. It may come as a surprise but Wenshang Communication was one of the earliest ODM manufacturers to set up factories in India. In September 2015, Wenshang Communications established a branch office in India, named Wenshang (India) Communications Co., Ltd. The company later established a joint venture with Mobiistar where the Chinese company would take care of manufacturing and sales and Mobiistar will address taxation, law and government relations.
Wenshang’s factory in India is located in the Bawal Industrial Zone in Haryana, India. The factory covers an area of 31,000 square meters. In 2016, there were 1,800 employees. In February 2016, 34 lines were officially put into operation, including 22 assembly lines and 12 packaging lines. Its customers include Reliance, Karbonn, and other mobile phone brand manufacturers.
Carl Ngo, Co-founder and CEO of Mobiistar, at the time of commencing their services in India, had said,“In the Indian market, consumers are often faced with the dilemma of features and quality vs. price. We aim to make the selfie experience and technology more accessible to users without having to compromise.”