Chinese smartphone manufacturers, responding to increased government oversight, are intensifying competition in India by offering higher margins
Chinese smartphone manufacturers are intensifying competition in the Indian handset market by providing greater margins to retailers and distributors than their competitors, according to a report by the Economic Times. This comes amid increased government oversight in the industry.
Xiaomi and Realme increased their margins to 8-11 per cent in the recent quarter, doubling from the previous 4 per cent. They surpassed the margins offered by Apple and Samsung, ranging from 8-10 per cent. In contrast, Oppo and Vivo, as per sources cited in the report, retained festival season margins at 16-18 per cent.
In Q3, the combined market share of the top Chinese handset manufacturers declined to 73 per cent, a marginal decrease from the 74 per cent recorded a year ago, as per data from Counterpoint Research. The increased margins coincide with a slight decline in the combined market share of these firms.
However, industry experts suggest that this move might help Chinese brands sustain their position, despite increased government oversight on their business fundamentals.
Chinese brands, including Xiaomi and Realme, are increasingly prioritizing offline retail for premium products and IoT expansion. Tarun Pathak, Research Director at Counterpoint Research, told ET that higher margins will incentivize retailers to invest time in educating customers about the brand and products.
Chinese handset brands, once heavily reliant on online sales, are shifting towards a 50:50 distribution of online and offline sales. However, Pathak noted that this move, driven by a shift towards premium products, requires earning the trust of retailers.