Can Indian Brands Gatecrash The Chinese Smartphone Party?
Is there any way in which Indian brands can get back to being among the top players in their home market?
Bob Dylan might have been referring to changing times and social change when he sang “The Times They Are A-Changin'”, but he might just as well have been singing about the Indian smartphone market in 2015. That was a time when Indian brands were calling the shots. Micromax seemed on the verge of toppling Samsung for the top spot, while Intex and Lava were in third and fourth spots, and Karbonn was lurking just outside the top five. This was a time when Chinese brands were very much present in the Indian market. Lenovo was part of the top five in Q1 2015, having acquired Motorola, and Xiaomi, Oppo, Vivo, and OnePlus were very much present and prominent in the Indian market (Vivo would become the IPL sponsor in 2016), but none of them could match Indian brands. In fact, many other notable brands like Sony, LG, HTC, and even the mighty Microsoft (which had acquired Nokia), were well behind the trio of Micromax-Intex-Lava.
From leaders to also-rans: The Indian phone brand story
Fast forward to the present day and to paraphrase Dylan, the order has rapidly changed indeed. There is no Indian company in the top five smartphone brands in the country, and four Chinese brands (Xiaomi, Vivo, Realme, and Oppo) rule the roost. In fact, there is no Indian brand that even seems close to threatening the hegemony of the top five — Samsung, Xiaomi, Vivo, Oppo, and Realme — that has remained virtually unchanged for the past few years. Many had predicted that there would be a drop in the popularity of Chinese phones following India and China's border stand-off in 2020, but that does not seem to have happened. Lava has been patiently persisting in the market while Micromax makes the odd splash from time to time, but neither seems even close to upsetting the applecart of the top five (or even of Apple, which has had a remarkable surge in popularity in recent times).
A few days ago, Bloomberg reported (citing sources) that the Indian government was considering stopping Chinese brands from releasing phones under Rs 12,000, to help Indian brands grow. Since then, other reports citing other sources have said that no such move is being planned, for the moment at least. However, the whole brouhaha has trained the spotlight on the Indian smartphone industry, and its prospects. Are things really so bad that Indian smartphone brands need to be propped up by Government measures to regain lost ground? Is there any way in which Indian brands can get back to being among the top players in the smartphone market of their own country?
Undone by pricing and supply issues…
To answer those queries, we really need to understand why Indian brands lost so much ground so rapidly. A simplistic explanation that many people put forward is that Chinese brands beat them in the price game, offering much better-specced devices at lower prices. There are also some cynics who say that many Indian brands actually simply rebranded Chinese devices and that when the Chinese themselves came to the market, Indian brands were not able to get devices at competitive prices anymore.
Like most simplistic arguments, both of these lines of thought are flawed. As we pointed out earlier, Indian brands were doing very well in early and mid-2015, in spite of the presence of a number of Chinese brands. In fact, there were even more Chinese brands in the market at that time than there are now — brands like Gionee, Meizu and Coolpad were in the market and some of them had a considerable following. In fact, it was only at the end of 2016 that Indian brands began to slip out of the top five in the market. So, it was not as if Indian brands were undone by a price war or by a drying up of the supply chain.
…or actually by 4G, the Jio way?
In fact, from what we know from internal sources in these brands (who obviously wish to stay anonymous), the biggest reason for the decline of Indian phone brands was their inability to adjust to the Indian market switching to 4G in a big way after the arrival of Jio in 2016. By many accounts, Indian brands had not budgeted for 4G to take off as massively as it did and had instead invested heavily in 3G phones. As a result, when the mainstream segment of the Indian smartphone market demanded 4G phones at budget prices, it was the Indian brands that went missing, living the field open for brands from other nations in general and China in particular. The rest, as they like to say, is history, which is also exactly what Indian brands became in their own market.
Trying to surf an anti-China wave
The past couple of years has seen activity from both Lava and Micromax on the smartphone front, especially in the period following the India-China face-off in 2020. The problem, however, was that the brands attempted to ride their comeback on a perceived anti-China wave rather than on their own merits — one of them even announced the launch of a new phone using the words "Chini Kum" which in Hindi means "less sugar" but can also mean "less Chinese," while another offered to replace consumers' Chinese phone with its own at no extra cost as part of a "desh bhakti" (devotion to the country) offer. Unfortunately, those approaches do not seem to have yielded the sort of dividends the brands expected, and the market share of Indian brands remains low.
This reveals the biggest challenge Indian brands face. It is not of price, but of actually perceived quality. Some of our sources in the retail community have told us that consumers are wary of investing in Indian brands because they tend to go missing for long periods of time and also are believed to have perceptions of poor quality. And in a very cruel twist of fate, Indian brands are now having a crisis of credibility in their own market.
Seven years ago, Chinese brands were on the back foot because they were relatively new and not too much was known about them, so many consumers preferred going with better-known Indian brands that had been around for a while. Today, the shoe is very firmly on the other foot, with Chinese phone brands having built up goodwill over the years, and Indian brands facing a crisis of consumer confidence. So much so that when the rumour of the Government banning Chinese brands from the under Rs 12,000 phone segment was circulating, many said that the move would benefit non-Chinese brands like Samsung, Nokia, and Motorola more than Indian brands. Some even said that Indian consumers might prefer purchasing second-hand devices from non-Indian brands.
A star cricketer making a comeback after retirement? Yep, like that!
Recovering consumer faith is likely to take some time. "Indian brands today are like a star cricketer who took retirement for a few years and then has suddenly come out to play again," a salesperson at a multi-brand retail store told us on condition of anonymity. "They might have a great history, but that does not mean their current performance will be as good as in the past. And when they were away, the world moved on and other stars emerged. You cannot fight on sentimentality all the time. A bowler will not give you an easy time and bowl gentle full tosses to you because you were a great batsman five years ago. He will try even harder to get you out, knowing you are not the player you were in the past! The market is like that."
That cricketing simile seems to sum up the state of Indian smartphone brands today. They might have proud track records but have got to prove themselves all over from scratch. It is not really going to be about a killer price but consistent performance in terms of general phone functionality, software updates, and after-sales service. All of which could well take some time. Time in which the competition — Chinese and otherwise — will have the opportunity to grow even stronger. It would be unfair to totally rule out a comeback by Indian phone brands in the Indian market, but it could be naive to say that their task is an easy one, even if the Government does step in with a helping hand.
They have been there and done that, with no aid from the Government. And now the likes of Lava and Micromax have to show that they can do so once again. It will not be easy but if they can focus on performance, keep prices competitive and maintain a consistent presence in the market, there is no reason why Indian brands cannot make it back to the top of their own market. Dylan did say that "the first one now will later be last," after all. Indian phone brands have been on the receiving end of that lyric. Their approach in the coming years could determine whether they will be the ones emerging on top in these times that are a-changin'.
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