Demanding Indian market is fraught with risks

At a time when smartphone sales growth has slowed down globally, India shines bright as the fastest growing hub for smartphone sales. Every smartphone brand is now looking at India as the critical market for growth. As a result, the hypercompetitive Indian smartphone market is now a real battleground for major smartphone brands.  

Over the past decade, Indian consumers have also become more demanding. They are no longer looking for just affordable smartphone brands. They are demanding the latest specs at affordable prices. Any smartphone brand that is vying for market share in India has to square up to this challenge.

For a long-time now, the Chinese brands have enjoyed presence in the unbranded feature phone market in India. Faced with slowing growth prospects in China, Chinese smartphone brands have been focusing aggressively on India. As per data from CMR’s India Mobile Handset Review Report, Chinese brands in CY2018 accounted for 60% market share in the India smartphone market.

The Chinese smartphone brands were able to attract and capture Indian millennials, providing them with affordable smartphones, that had the latest specs backed by attractive designs. With their keen investment in understanding consumer personas and mapping their products, Chinese brands could capture the Indian market.  

By identifying the market potential of new, successful smartphones from global players, the Chinese brands have invested in an innovation strategy focused on iterating and mastering upon proven product innovations from competition. The vast hypercompetitive Chinese domestic market, easy availability of domestic manufacturing facilities and accessibility to superefficient supply chains, helped the Chinese growth.

From mere imitation to true innovation, the competitive nature of Chinese smartphone market has fuelled the growth of XOHOV (Xiaomi, Oppo, Huawei, OnePlus and VIVO) brands in India. Today, HOVOC accounted for more than 50% of smartphone shipments in India in CY2018, as per data from CMR’s India Mobile Handset Review Report.

Consider Xiaomi, for instance. With its quest for affordable innovation, and using an online only sales model, it took India by storm with new smartphone models being introduced at very short intervals. Or, consider, Huawei with its technological prowess, introduced new smartphone innovations across price bands. Or, consider OPPO, that made a mark in 2018 by pushing the envelope for smartphone innovation. In India, while the early success for Chinese smartphone brands came almost exclusively through online platforms, they have over the past 4-5 years, attained maturity and scale.

Now, having achieved online growth potential, their focus is on rapid offline expansion.  Take, for instance, Xiaomi’s relentless pursuit of growth in Tier-III cities and beyond.

Recognising that online and offline consumer personas are distinct, major Chinese brands are leveraging a hybrid market model to reach consumers. Lastly, the push for innovation is backed by hyper-marketing. Chinese brands continue to outspend others in marketing, whether it be through promotional tie-ups, or through exclusive celebrity endorsements, or sponsorship of large-format sporting events.

Chinese smartphone brands are also focused on setting India R&D hubs. By leveraging Indian R&D talent, they are looking at ramping-up India-first smartphone innovations for the world.

The demanding nature of the India market, while having significant growth potential, is also fraught with risks. For succeeding in India, it is not just about focusing on getting some elements right – whether it be product, price or marketing.  

The writer heads the Industry Intelligence Group at Cyber Media Research