Indian mobile phone makers’ business has been adversely impacted: India Ratings

Written By:

According to the new report by research firm India Ratings and Research ( Ind - Ra), Indian mobile phone makers' business profile has been adversely impacted due to the rapidly increasing market share of Chinese players and fierce competition.

Indian mobile phone makers’ biz profile has been adversely impacted

It says that the increasing strength of Chinese mobile phone manufacturers in the smartphone market is reflected in the 3.4x growth in market share to 51 percent in quarter one of this calendar year (CY).

The report added that, There is a complete change in the market position of the top five smartphone players in the last financial year, as Micromax Informatics, Lava International Ltd., and Karbonn Mobiles Pvt Ltd were replaced by Xiaomi Inc., Vivo Mobile India Private Limited's (Vivo India; 'IND BB'/Stable) and Oppo Mobiles India Private Limited's (Oppo; 'IND BB'/Stable).

While the global vendor Samsung Electronics Co Ltd (Samsung) remained the market leader with the 28percent share in 1QCY17 (1QCY16:25 percent), the share of Indian vendors downsized to a mere 14 percent (40 percent). Lenovo also sustained its position due to the established brands and products in the diversified price segments. Oppo and Vivo India have recorded sales increases of seven to nine times over FY17 respectively. Ind-Ra expects Vivo India and Oppo's smartphone sales to grow by around 40percent -50 percent over FY18.

The research firm pointed out that, the recent success of Chinese players can be attributed to their strong brand through substantial advertising expenditure and sales channel building funded by the sponsors. Chinese smartphone makers enjoy a debt-light capital structure and healthy liquidity due to the long payable period extended by their suppliers. Better technological capabilities of the Chinese players leading to superior product offerings have also contributed to their success.

Ind-Ra also opines that established Indian vendors will face difficulty in sustaining, despite the early mover advantage and a more diversified product profile. Thus, Indian players' recent investments into mobile phone assemble lines will face an elevated stabilization risk, while advertising spends and fierce price competition will directly hit the operating margins. Indian smartphone makers have been slow in reacting to ongoing product innovation in the market, and are further constrained by limited marketing budgets.

Read More About micromax | vivo | oppo | samsung | Mobile | news

Please Wait while comments are loading...
Opinion Poll