It was quite evident in 2016 from the market share of smartphones being shipped to India that Indians were buying Chinese smartphones thick and fast. A new report in the Economic Timessuggests that by mid-November 2016, Chinese brands had cornered 51 percent of the smartphone market by shipments to India.
There were a couple of factors at play. First, the government's demonetisation announcement on 8 November reduced sales of premium smartphones. And, even though 1 lakh iPhones were sold within three days of the announcement, overall shipments for the Apple devices fell as compared to October. Sales for India's number one smartphone player, Samsung, remained the same.
The budget phone segment, that falls under ₹15,000 for a device, benefitted a lot and Chinese companies took advantage of that. Although, smartphones priced under ₹7,000,where Indian companies have a stronghold, took a hit. In September, the market share for Indian companies and Chinese companies was the same at 34 percent each. Apple and Samsung together held 32 percent of the market.
However, in October, the market share of Chinese manufacturers rose to 47 percent. Analysts predict that the market share of Chinese phones could go up to 60 percent by the middle of 2017.
"This is the first time that Chinese brands together account for 51 percent share in the smartphone segment, resulting in Indian brands combined share to drop below 20 percent, from a peak of over 40 percent earlier this year," Neil Shah, research director at Hong Kong-based Counterpoint Research, told ET.
According to the Q3 report for 2016 from the market research and advisory firm, International Data Corporation (IDC), Lenovo rose to the second position in the Indian market, while Xiaomi almost snatched the third place. The once market ruler Micromax is battling with constantly falling market share. Other Chinese manufacturers such as Oppo and Vivo have shown tremendous growth backed by a strong offline sales strategy.
Indian smartphone makers don't have a very strong presence in the segment above ₹10,000 which seems to be growing rapidly. While Reliance has entered the fray by selling a sizable number of LYF phones, that could be short lived as getting the Jio SIM, with all its free services, was the main incentive for many to buy the phone.