51% of the Indian smartphone market is comprised of Chinese phone companies by shipments

Chinese mobile makers are giving the global players like Samsung and Apple a really tough time. Even the India players are taking a blow, amid heightened competition and demonetisation that has shrunk smartphone sales in the Indian market.

Chinese players like Oppo, Vivo, Xiaomi, Lenovo and Gionee, which have been very aggressive in marketing, have cornered more than half of the smartphone market by shipments in November, for the first time ever, even as Apple's shipments fell sharply and Samsung's was mostly flat compared to October 2016.

"This is the first time that Chinese brands together account for 51% share in smartphone segment, resulting in Indian brands combined share to drop below 20%, from a peak of over 40% earlier this year. In just a couple of months, the tides have changed, which shows volatility of the Indian smartphone market,” Neil Shah, research director at Hong Kong-based Counterpoint Research, told ET.

As of September-end, Indian players were at par with Chinese smartphone makers, each having 34% share of the market. They were followed by global players, led by Samsung and Apple, with 32% share.
However, the picture totally changed in October during the festive sales, when Chinese players' share jumped to 47%, and then a further four percentage points in November. On the other hand, multinational players dominated largely by Apple and Samsung lost three percentage points month-on-month, to be at 32% in November. Indian players were at a dismal 18% in October and November.

As per the analysts, Chinese players' share can well rise to 60% of the smartphone market by middle of 2017.

Players like Samsung, which had a 22.6% share around September end, have seen flat shipments in November as consumer demand plunged post demonetisation. However, the impact was more on Apple as the company's shipments fell by half, from 4 lakh units shipped in October, as per market estimates. This is despite a sharp spike in the few days after the demonetisaton announcement on November 8.

Demonetisation has also affected consumers' ability to buy phones in the sub-6,800 price category - the bread and butter of most Indian handset players. This is also the segment where most of the featurephone to smartphone transition was happening - a transition that has slowed, thanks to affordability and use case issues.

"The Indian vendors' prime focus is the entry level segment, which is mainly driven by cash, while Chinese players operate in the higher price segments, where largely transactions are done through cashless media,” Jaipal Singh, senior analyst at IDC, told ET.

For local brands to grow at the expense of Chinese brands, they will have to compete with an effective portfolio in the 8,000 to 30,000 price segment, analysts say, where they are mostly absent.

Faisal Kawoosa, principal analyst at CyberMedia Research (CMR), said Indian vendors lately felt that there is still potential in feature phone segment, which had an impact on their smartphone strategies.

Indian players highlight the financial support Chinese players get from their government to enter Indian market - critical arsenal that Indian players don't have to fight off competition.

"The money they are spending on each handset, I don't think any Indian company or multinational company can do it,” Pradeep Jain, MD at Karbonn Mobiles, which has seen primary sales go down by 40%, told ET.

"It's not good for India the way Chinese government is supporting these companies to enter the Indian market and sell their smartphones. In my view, it would pose a challenge to Indian companies,” he added.