Smart Chinese phone vendors eye pole position

High-end features, low prices, a mix of online and offline sales. Have the Chinese vendors figured out the pulse of the world's third largest smartpho

Last month, when Xiaomi announced the global launch of its new high-end phone — the Mi 4i — in New Delhi, more than 10,000 young fans lined up for the 1,600 entry tickets to the Siri Fort Auditorium function. Reports say that the biggest screams from the auditorium came when the handset’s price was announced. At Rs 12,999, the phone was considered price competitive, considering the features it packed.

“(The Mi 4i) is not a Chinese design that is imported to India, this is a product designed with this market in mind,” Xiaomi’s Global Vice President Hugo Barra said at the event. Indeed, it turns out that research on its processor was led by a Bengaluru team. Barra also said Xiaomi could one day make the phone in India.

The excitement around the Mi4i launch revealed a lot about the forces at play in India, one of the world’s most hotly contested smartphone markets. China is the world’s biggest smartphone market, and according to recent data from IHS Technology (April 2015), Xiaomi — an intrepid five-year-old firm which became the world’s No.5 player last year — has the largest market share at 14 per cent. IDC, however, has forecast smartphone growth in the Chinese market to slide to 10 per cent this year. In contrast, Canalys found the Indian smartphone market, the world No.3, grew at a blistering 90 per cent in the December quarter. No wonder, Chinese companies are making a beeline to India and even making exclusive global launches here.

The central role of pricing

The Siri Fort event was made notable by the presence of Lei Jun, the charismatic Xiaomi founder who wants to bring luxury gear at affordable prices to consumers in emerging markets. It seems pricing is key to cracking the Indian market. Ericsson ConsumerLab surveyed 15,000 households across 33 cities to mine insights about Indian mobile phone users. The poll, released in April, found smartphone adoption at 33 per cent in mid-size and small cities compared with 27 per cent in big non-metros and large cities. It also found that lower smartphone prices have raised the adoption of mobile internet within the urban, weaker socio-economic segment from 38 per cent in 2013 to 45 per cent in 2015. With smaller cities and lower segments pushing smartphone sales, it makes sense for vendors to price phones attractively.

Canalys says five of the top 20 vendors in India for the December quarter were Chinese firms. Together with Taiwan’s  ASUSTeK, the six had 13 per cent market share. Chinese players like Xiaomi, ZTE, Gionee, OPPO, Coolpad, AOC, and Philips, along with the familiar Lenovo and Huawei, could soon become household names in India. This is no mean task since market leader Samsung fiercely guards its turf. According to data by Cybermedia Research (CMR), Samsung increased its smartphone market share to 27.9 per cent in the first quarter of 2015. CMR Lead Analyst Faisal Kawoosa attributed it to “Samsung’s ability to add to its portfolio in all the major price segments by launching new models in entry-level, mid-range, and high-end segments”.

Gionee claims to have about four per cent share of the Indian handset market, and wants to become a top five smartphone brand. “Last year, we sold four million devices in India and 28 million globally. That is one-seventh of total sales. This year, we expect sales to touch eight million. India would account for 20 per cent of our revenues,” Gionee president William Lu told a news agency. According to IHS Technology data, Gionee is not even a top 10 player in China. ZTE has 30-plus models in India, the same as Gionee. Both have publicised their intent to set up research and development (R&D) centres in the country.

Niche players are strategising

Deccan Herald recently spoke to three Chinese smartphone vendors to get a feel of their India strategy. Shenzhen Sang Fei Consumer Communications Company, a division of telecom gear giant China Electronics Corporation (CEC), started selling smartphones here since May last year. Globally, Sang Fei has been selling phones under the Philips brand name since 2007 after it took over the latter’s mobile phone division. 

SS Bassi, Country Manager, India, said the company manufactures 10 million phones a year and has sizeable market share in China and Russia. In India, though its share is in the single digits, Sang Fei is targeting to be a top 10 player by the end of the year with at least 15 models. The imported phones are distributed by Redington India across 1,600 stores with a target of 8,000 by the year-end.

The three Philips smartphones in the market are priced Rs 5,600, Rs 6,500, and Rs 9,000 respectively. Bassi said the high-end smartphone comes with a 5,300 mAH battery which can run for 66 days on standby. For heavy use, a charge lasts 3-4 days, he said. Bassi thinks Sang Fei can tap into the brand connect with Philips in India. “You must have used a Philips product at some point,” he says. Apparently, the 124-year-old iconic Dutch company still has a role in quality control. “Today at Sang Fei, quality is still controlled by Philips representatives. They approve each and every model. They are involved with the R&D and branding too,” Bassi said.

AOC, which is a brand name of the Hong Kong-based, $11.6-bn TPV Technology, is a global biggie in monitors and televisions. Atul Jasra, Business Head, AOC India, told Deccan Herald that TPV owns a third of the global capacity in monitors and TVs. “Essentially, every third display product that you see, be it a monitor or a TV, it would have something to do with TPV.” He said AOC launched smartphones and tablets globally in Latin America three years back, and was especially successful in Mexico. Very recently, AOC entered India with three models  — a 4-inch smartphone priced Rs 4,000, a 6-inch phablet priced Rs 7,000, and a 7-inch tablet priced Rs 6,000.

Jasra said AOC uses competitive pricing and feature-packed software to differentiate itself. AOC phones integrate 21 Indian languages, with both rendering and data input allowed. Then there are the one-year free anti-virus from F-Secure, and the 3,000 Bollywood titles available for free downloads. The phones come with subsidised India Today Group magazine subscriptions. Jasra says AOC wants to be a reasonable market player. “In the next two to three years if we achieve 5 or 7 per cent share that would be good enough.” AOC has just appointed a distribution partner and is present in 7-8 states in what Jasra refers to as phase-1. While not selling online actively, some of its offline retailers do sell the phones online. Like Philips, AOC too uses the Android platform for its phones.

OPPO Mobiles, on the other hand, uses a fork of Android called ColorOS for its smartphones. OPPO may not be a big name in India, but it has eight per cent market share in China. Tom Lu, CEO, OPPO Mobiles India, said in an email response that the company, which recently completed one year in India, “retails in over 20 major cities and regions, mainly through multi-brand stores, and has started to partner with nation-wide retail chains like Flipkart and Amazon.in for online sales. We are also planning to build our showrooms and exclusive stores in a short time”. Tom said OPPO wants to tap the trend of smartphones doubling up as cameras.

“OPPO N3 is the first smartphone with a motorised camera which can get 64 MP Ultra-HD photography with 16 megapixel camera,” he said. The CEO said OPPO also lays stress on battery life and strength. “The OPPO VOOC Flash Charge is capable of charging the phone’s battery from zero to 75 per cent in only 30 minutes. Useful accessories such as VOOC car charger and VOOC power bank makes the smartphone ready and charged at all times of the day.”

High-end features, low prices, a mix of online and offline sales. Maybe the Chinese vendors are on to something in India. The Ericsson ConsumerLab survey cited above had this feedback from a 21-year-old student from Haryana’s Sonipat, “Smartphones are cheaper than buying a laptop or a computer, and I can be mobile while still connected.” Trust the Chinese smartphone vendors to address this demand from Young India aggressively.

“Yes, we will be competitively priced. And we will try and get the sleekness to the customer at a competitive price, but that doesn’t mean we will be the least priced ones.
Atul Jasra, Business Head, AOC India.

“OPPO has chalked out aggressive consumer connect and marketing promotion campaigns to reach out to the masses across India. Today’s users are highly technology savvy and are willing to pay…”Tom Lu, CEO, OPPO Mobiles India
“Unless you have the complete distribution lined up all over India, ...it’s not viable to start advertising in a big way. Once we have the complete reach, there will be a big spend.”
SS Bassi, Country Manager, Shenzhen Sang Fei