A recent report churned out by India Ratings & Research (Ind-Ra), a Mumbai-based agency that provides ratings, research and rigorous analytics of market in India, has spelled a period of worry for Indian mobile phone manufacturers. According to the report, Chinese smartphone manufacturers have been successful in capturing a whopping 51 percent of the mobile phone handset market share in India leaving their Indian counterparts much behind in their very own country.

The Ind-Ra report also threw light on the major movement that took place in the list of market position of the top five smartphone players in India in FY17. Micromax Informatics, Lava International Ltd. and Karbonn Mobiles Pvt Ltd had to let go of their positions on the list and their positions were occupied by Xiaomi Inc., Vivo Mobile India Pvt Ltd. and Oppo Mobiles India Pvt Ltd.

Lenovo succeeded in retaining its last year's position as it enjoyed the advantage of having established products in diversified segments and a brand name that Indian people have began to trust. Oppo and Vivo India broke into the top five list as they succeeded in recording sales increases of seven to nine times over FY17 respectively. According to Ind-Ra, Vivo and Oppo will continue their good run even in FY18 and will be successful in increasing their sales by a whopping 40-50 per cent.

The report also revealed that although global vendor Samsung Electronics Co Ltd. still remains the undefeated king of the market with a 28 per cent share, the share of Indian vendors fell tragically from 40 per cent last year to a slim 14 per cent this year. This is when the Chinese mobile phone manufacturers saw a 3.4 times year over year growth in their market share in the country.

According to Ind-Ra, this major movement in the Indian mobile phone market was fuelled by the launch of Reliance Jio as the telecom's lucrative free data and voice services offer skyrocketed the demand for 4G Volte enabled smartphone in the country. As the average data prices saw a downward trend, it ended up providing a stimulus to smartphone sales in the Indian subcontinent. In fact, in order to stand their ground against Jio, other incumbent telcos also ended up providing their users with something to celebrate and offered them differentiated data offerings for 4G smartphone users. This further resulted in driving a higher smartphone replacement demand in the country as well as a faster migration rate from feature phones to smartphones. The Chinese phone companies realised the big opportunity that existed in the market and pounced on it with all their might with competitive pricing strategies and aggressive marketing/advertising, which ultimately resulted in them becoming the leaders in the budget and the mid-price segment and earning major market share gains.

In addition to this, the major success that Chinese manufacturers witnessed last year in the Indian subcontinent can be attributed to the strong brand building strategy exercised by the Chinese players through fat advertising budgets and sales channel building funded by their sponsors. Further, a majority of Chinese smartphone players have a debt-light capital structure at place and enjoy healthy liquidity due to the long payable period being extended by their suppliers. And, yes, it is not all about advertising and marketing. Chinese smartphone players have better technological capabilities than their Indian counterparts and their superior product offerings seems to have caught the attention of the Indians.

The Ind-Ra report also warns the Indian smartphone makers to tighten their seat belts if they wish to have a long haul in the Indian smartphone market. According to it, since Chinese players like Xiaomi have invested big bucks in brand building and manufacturing facilities in India, it shows that they're committed to stay. Indian smartphone makers slow innovation rate and limited marketing budgets are acting as major constraints on their future in the Indian smartphone market.

[Top Image: Android Headlines]

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