By LU Keyan
Times are tough for Chinese phone makers in India, plagued by visa problems, tax inspections, frozen assets, and criminal investigations.
In January, Xiaomi was ordered to pay US$88 million (603 million yuan) in overdue tax. In April, the Indian authorities froze US$725 million cash from the company, citing inappropriate transfers from China. Other Chinese phone makers like Vivo and OPPO have been raided by tax authorities who accuse them of evading over a billion yuan in tax.
Approach with caution
In Q2, India made 364 million smartphones, 5 percent fewer than in Q1. Among the top brands, Chinese phones occupied 67 percent of the market, a 7 percent drop year-on-year.
“This is our worst year in terms of both sales volume and profit,” a representative of a Chinese phone maker in India said. He told Jiemian News that high-end phones are not popular among Indians while budget phone makers are in a price war, trying to clear inventories. As prices go down, so does margin.
ZHAO Ming, CEO of budget phone maker Honor, said “everybody knows” why the company has pulled its team out of India, but operations continue as partners and suppliers remain. Honor will explore the Indian market with “extreme caution.”
India is not known for being friendly to foreign companies. Carmakers Ford and GE have already left. Due to visa limitations, as many as 90 percent of Chinese employees work from home in China. Local monopolies and small companies are often protected while foreign companies face “adjustment.”
India wants to support local phone makers, but China dominates the supply chain, with superior R&D, marketing, and quality control, making it highly unlikely that an Indian firm - Micromax or LAVA, for example - will make a big impression on the market any time soon.
Not taken seriously
YANG Shucheng, Secretary-General of the India China Mobile Phone Enterprise Association, said if Chinese phones continue to decline in India, Samsung will end up dominating the market, which is not something India wants.
There are rumors that India plans to limit production and sales of Chinese phones to those below US$150. Half of the products of Xiaomi and Realme are under US$150, more than 90 percent of Transsion’s phones are cheaper than that, but Chinese companies are not worried. They doubt the plan will actually be carried out.
“I think it’s just some senator clamoring for attention,” a representative said. “Any reckless move to restrict foreign investment will only harm the credibility of India.”
