Every single smartphone manufacturer on the globe has set its eyes on the most lucrative smartphone market, India. The Indian Smartphone market is primarily dominated by Korean smartphone giant Samsung, which accounted for 22.8% of total smartphone shipments in Q2 2016. On the parallel front, the other smartphone manufacturers are making every possible move to grab a sizable share of the market. The world’s third largest smartphone manufacturer Huawei is, reportedly, vying to capture 10% of the smartphone market share in India by 2017. Huawei also enjoys the Numero Uno position in China as the company accounted for 17.2% of smartphone shipments in Q2 2016. But this is not the first attempt by the Chinese smartphone major to grab a double-digit market share of smartphone market in India. Earlier also, in 2015, Huawei planned to capture 10% of the total budget phone market in India but wasn’t successful.

“We want to be a leader in the India (smartphone) market. India’s consumer business directly reports to China headquarters because of importance of the market” said Peter Zhai, President of Huawei India Consumer Business Group.

The words of Peter Zhai clearly signify the tremendous potential of the smartphone market in India. The country still lacks a considerable smartphone penetration, although India is the second largest smartphone market globally.

The Chinese smartphone behemoth, Huawei banks on its dual-brand strategy (Huawei and Honor) and the mix sales strategy of offline and online in India. The dual brand strategy helps Huawei to concentrate on the budget as well as the premium market of smartphones in an efficient manner. While Huawei brand is targeted towards the premium smartphone segment, its Honor brand caters the budget smartphone market.

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Huawei seems to be bullish about its expansion plans in India. The company is planning to strengthen its offline presence by increasing the number of its retail stores, from 2,000 currently to 50,000 stores by the end of 2016. The Chinese smartphone giant is also gearing up to set up a smartphone manufacturing plant in India; Huawei has successfully obtained the license required to set up its smartphone manufacturing plant in the country recently.

Huawei is betting big on its vast research and development faculty in India that would help the firm to understand the local market equations and customers’ preferences.

Huawei Smartphones in India: A Big Window of Opportunity With Unprecedented Challenges

Undoubtedly, India is the most lucrative smartphone market as in the country of 1.3 billion people with 1.07 billion mobile subscriptions the smartphone has reached a meagre 17% smartphone population penetration. Analyst firm Gartner has predicted that smartphone shipments are estimated to record a phenomenal 29% year over year growth in 2016. Therefore, the prospects are unending, and a majority of global smartphone manufacturers are vying to carve a niche in Indian smartphone market.

The Huawei’s strategy to increase its offline retail channels for selling their smartphone might be considered as an impressive move. Offline smartphone sales are still accounting for a lion’s share of total smartphone sales in India.

A recent report highlights the rising smartphone adoption in rural areas and tier-3 cities in India. Nearly 60% of the mobile phones in these regions are basic feature phones, therefore poses a big window of opportunity for local and budget smartphone manufacturers. The primary focus for Huawei must be on the budget smartphone market – sub-$150 smartphones – in India, which accounts for 71% of total smartphone quarterly shipments. Besides, as of 2015, the Average Selling Price (ASP) of a smartphone in the country is hovering Rs. 10,700 ($160) and is decreasing with each passing quarter.

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The Chinese smartphone major, Huawei, still has a long way to go. In Q1 2016, the company failed to feature in the list of top 5 smartphone manufacturers in India, according to the counterpoint research. The worrying factor for Huawei is that its other Chinese competitors, such as Xiaomi and Vivo, posted an impressive year over year growth in the number of smartphone shipments in Q1 2016.

The competition for Huawei in the Indian smartphone market would surely heat up as some foreign smartphone manufacturers, including Apple and Lava, are also planning to set-up their manufacturing plants in the country. On the other hand, the recently passed Goods and Service Tax (GST) bill is slated to increase the price of goods especially smartphones. Therefore, it would be interesting to see how Huawei addresses these challenges to capture a sizable share of smartphone market in India and succeeds of course.