Expanded lockdown adds to Indian smartphone industry woes

By GT staff reporters Source:Global Times Published: 2020/4/22 16:03:40

A health worker sanitizes an area near the Nizamuddin mosque in New Delhi, India, on April 10, 2020. (Xinhua/Partha Sarkar)

Under India's expanded national lockdown to slow the spread of the coronavirus, the country's smartphone sector, one of its pillar manufacturing industries, has halted production. However, as a dominant force in the Indian market, Chinese smartphone vendors hope for an early and safe reopening of business. 

Chinese brands including Xiaomi, OPPO, Vivo and Realme shut their factories in March in India pending further notice. 

Realme, a Chinese smartphone brand that operates in the Indian market, said their production and sales in India have been completely halted since the lockdown began.

The outbreak of COVID-19 has disrupted markets like China, South Korea and the US, where most suppliers of smartphones are based. That has definitely contributed to crippled supply chain, a Realme spokesperson told the Global Times.

"Meanwhile, the value of the Indian rupee has been fluctuating, losing value against the US dollar. Alongside a new surge in demand after the lockdown, all brands need to evaluate the impact of components' increasing prices," said the spokesperson.

China's OnePlus has emerged in India as a leader in premium smartphone brands, and is accelerating its pace of customs clearance to maintain normal shipments in the Indian market, the company told the Global Times.

"The epidemic in India is affecting all the smartphone brands, which need to adjust their marketing paces and strategies in response," said Liu Zuohu, founder and CEO of OnePlus.

Liu forecast that the online channel will recover earlier than other channels once the national lockdown is lifted in May.

A mobile phone industry insider who asked to remain anonymous told the Global Times on Wednesday that some Chinese companies are trying to apply to local government in an attempt to resume production capacity. "I think the sanitary conditions in some Indian plants are better than elsewhere," said the insider.

Amid India's prolonged lockdown, Chinese companies are not running well in India, a senior executive of a Chinese company in India told the Global Times. 

"For some Chinese businesspeople, a desire for an early and safe reopening of the economy, and fear of the pandemic worsening in India have consumed people's thoughts," said the executive, who is familiar with Chinese business community in India. 

"The last thing Chinese companies want to do is to slash local jobs, and naturally, they want a reopening of the economy at the earliest," the executive said.

The Indian government is also facing huge pressure to reopen its economy at an earlier date as many Indians are not receiving any incomes under the lockdown.

The South Asian country by Wednesday had seen 19,984 confirmed cases and 640 deaths. Although India recorded its first case at the end of January, numbers began to spike in early March.

Xiaomi, the Chinese smartphone vendor that took the lead in the India with a 29 percent market share in 2019, has asked local government to classify handsets as an essential commodity which can be delivered to customers through e-commerce platforms amid the lockdown, according to the head of Xiaomi India.

"We are currently living in uncertain times and nothing can be predicted. All employees are presently working from home and will continue to for the duration of the government recommended lockdown period," Xiaomi India told the Global Times Wednesday.

Smartphones are one of the most essential items after food and groceries that anybody requires. "We will have to assess the situation once the lockdown lifts to truly evaluate the demand. In the meantime, we are working toward extending aftersales care for our users," Xiaomi India said.

According to Counterpoint Research, India's smartphone industry could take a $2 billion hit due to the COVID-19 pandemic as shipments declined significantly in March and April compared to the previous year. 

A 3 percent decline in smartphone shipments is expected in the Indian market in 2020, to end at 153 million units compared to 158 million units last year, Counterpoint Research said.

Given the lockdown in India and various uncertainties, more manufacturing orders have recently transferred to domestic original equipment manufacturers, the industry insider said.

Sun Yanbiao, head of Shenzhen-based research firm N1mobile, said that it is possible that Samsung is switching its orders from India, because the electronic devices it makes are sold not only in India but in overseas markets including Europe.

"Chinese vendors might not make such a move as when made-in-China handsets are exported to India, they face punitive tariffs and lengthy customs clearance, which is not worth it," Sun told the Global Times on Wednesday.

"For now, most vendors are choosing to wait for the government's next move to combat the coronavirus, and then they will make their decisions," he added.


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