BBK Group Partners with Dixon Technologies to Leverage the Government’s PLI Scheme

In a strategic move to strengthen its position in the Indian market, China's largest mobile phone manufacturer, BBK Group, has recently partnered with local companies Dixon Technologies and Karbonn Group to produce its popular smartphone brands Oppo, Vivo, and Realme.

This collaboration underscores BBK Group's intent to leverage the Indian government's Production-Linked Incentive (PLI) scheme, as reported by the Economic Times. The initiative also aligns with the Government of India's mandate for foreign companies to integrate local partnerships into their operations.

BBK Partners with Dixon Technologies

Oppo and Vivo, two of BBK Group's flagship brands, have been operating significant manufacturing units in India, producing a wide range of products encompassing brands like OnePlus and iQOO, in addition to their own.

The move to engage with Indian contract manufacturers comes in the wake of heightened scrutiny and regulatory measures imposed on Chinese firms by the Indian authorities over allegations including customs duty evasion, income tax fraud, and money laundering.

Despite not applying for PLI benefits directly, Oppo and Vivo's partnership with local manufacturers, already beneficiaries of the scheme, positions them for competitive advantage, particularly against rivals like Samsung who are part of the PLI program. In 2022-23, BBK Group maintained its lead in the Indian smartphone market, generating substantial revenue of Rs 81,870 crore.

The government's push for Chinese firms to collaborate with Indian entities extends beyond manufacturing. It includes distribution partnerships and the appointment of Indian nationals in crucial managerial roles, aiming to boost local value addition by encouraging component production within the country.

A Move to Intensify Manufacturing in India

Last month, Dixon's managing director, Atul Lall, announced impending partnerships with two significant global phone brands, indicating the commencement of production for these brands in the upcoming months. This development is reflective of the broader industry trend towards local manufacturing.

According to market analysis by Counterpoint Research, Vivo, Oppo, and OnePlus have seen an increase in their market share of up to two percentage points in 2023, demonstrating a positive performance trajectory.

Conversely, the financial outcomes for BBK's divisions in India have been mixed; Oppo Mobiles India reported a 9% decrease in sales at Rs 51,994 crore for 2022-23, while Vivo Mobile India witnessed an 11% increase, reaching Rs 29,875 crore.

This strategic maneuver by BBK Group to intensify its manufacturing and operational footprint in India through local partnerships not only aims to navigate the regulatory landscape but also to solidify its market presence amidst competitive and challenging conditions.