Journal : Global Times (Chinese) Date : Author : NA Page No. : 11

“Indian iPhone” cannot defeat Chinese mobile brands

Negotiations still on;     Market past the good season to gain a foothold

Global Times special correspondent in India: Zhou Liangchen; Global Times correspondent: Li Meng

For the past few days, the Indian city Bangalore has been excited about the news of Apple’s “Make in India” program. This information industry city known as the “Silicon Valley of India” is about to get a new city business card. For Apple, manufacturing in India is only a matter of time. And after starting the actual production in India, whether iPhone—which originally doesn’t have much of a market share in India—will impact the Chinese mobile phone brands, is also attracting considerable attention.

Will get “super mobile phone treatment”?

According to a report in The Hindu on February 5, Wistron Corp, a Taiwanese manufacturer will set up a special iPhone factory in the suburbs of Bangalore, and the plant would be operational by April this year at the earliest. The main model to be produced in the first batch will be iPhoneSE. Although the above information has been confirmed by the minister of Information Technology Priyank Kharge of Karnataka state where Bangalore is situated, the details of negotiations between Apple and the Indian government, which started at the end of last month, have not yet been revealed. Whether Apple would receive a “super mobile phone treatment” while entering the Indian market is still unknown.

The latest round of negotiations between Apple and the Indian government started on January 25. The two sides’ focus of game still was whether Apple would establish in India as a high-tech company, or just as a well-known mobile phone brand. The difference between the two is that the former has a 15-year-long tariff exemption period, and need not consider the restriction that the cell phone assembly must source 1/3 of their products locally in India.

According to an analysis by the Indian newspaper Business Standard on February 4, Apple itself is very clear that the Indian government cannot agree to all its demands. Merely the “exemption of customs duty” itself is unprecedented, and even a certain degree of reduction of taxes will make other similar enterprises feel “discriminated against”. Indian Express also reported on February 4, saying that the very high retail price is the biggest obstacle to Apple’s mobile phone sales in India, and production in India will undoubtedly lower production costs, while opening stores in India will also reduce its sales links. Apple hopes for a “package negotiation” with the Indian government regarding its plan to fully enter India, in which there will be certainly some concessions on certain conditions.

What will be the difficulties?

Currently there are 35 mobile phone factories in India, producing 18 million mobile phones per month, in which Apple should have its niche, which is also why India is not afraid of Apple not coming. Data from the fourth quarter of last year show that Apple’s mobile phone sales in India reached a record of 800,000 units. But this figure is only ranked tenth in India of the mobile phone sales over the same period, the top two being Samsung with a 24% market share and Vivo with 10 % of market share. Xiaomi and Lenovo share the third position with a 9% market share. From these figures it is obvious who the main forces are in the Indian mobile phone market, and the Indian government will not neglect the interests of other mobile phone companies for the sake of Apple’s face.

Mr. Kasar, director of IT industry section at the Bangalore-based Teltes consultancy company told Global Times that the Apple production in India is good news for consumers. The iPhoneSE is currently priced at 39,000 rupees (about 3,800 RMB), and the sale price will be reduced by about 10% after manufacturing in India, which would fall into the middle to high-end price range. From another perspective, in this price level the competition between branded mobile phones will become more intense. Currently brands like Samsung, Vivo, OPPO, Xiaomi and Huawei all have their flagship models on the sale, and they all will start a substantial competition with Apple.

According to India’s Zhudao information consultancy firm, Apple’s premium models have limitations in the Indian market. If they want to sell refurbished sets, the Indian government does not allow. The old models are selling, but the profits are low. As long as the spending power of Indian consumer does not improve, Apple’s profits are also difficult to increase, and this change takes time. To change the present situation, Apple must become more active, such as introducing suitable models for the Indian market, introducing better financial solutions or collaborating with local telecom operators.

Indian consumers are ultra-pragmatic

Do they feel the pressure of “Indian iPhone”? A person in charge of a Chinese mobile brand’s Indian branch says that Indian mobile phone market is maturing, and it is not a place one can easily gain a foothold where “people are dumb and have excess money”. Consumers have pragmatic demands on the phone price, features, user experience and so on. This requires hard work and careful cultivation by enterprises attempting for long-term goals. Most of the mainstream models of Apple sold in India are old or even ones which have fallen into disuse, which in many aspects are out of trend. In this respect, Apple does not have a competitive advantage.

Mobile phone China Alliance Secretary-General Wang Yanhui told Global Times on February 5 that, local brands were doing better in the Indian mobile phone market a few years ago, and with the entry of Chinese brands in the past two years, there have been some changes. Lenovo, Xiaomi and Vivo are doing well in India. But Samsung has all along been ranking first in the Indian market. Because of higher prices, presently Apple does not fall into the same price range as that of the Chinese brands; hence there is no particularly large competition. Therefore, after Apple starts manufacturing mobile phones in India, it will not have an impact on the Chinese brands, and in the short term the main rival will still be Samsung. ▲

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