KOLKATA: Chinese smartphone makers Oppo and Vivo , which together have a 17% share of the market in India, have slashed trade margins by over 40%, leading to a backlash by neighbourhood stores and mobile phone retail chains.Industry executives said Oppo and Vivo have lost about 10,000 sales outlets each. Both had about 70,000 outlets each in the country before the margin cuts and the number of stores selling their phones may fall further, they said.Chains including Sangeetha Mobile, Big C, Lot Mobile, Poorvika, Mobiliti World and Hotspot have stopped selling the two brands or reduced focus on them, three senior industry executives said. These chains have a combined network of over 1,300 outlets.Oppo and Vivo, both founded by Chinese billionaire Duan Yongping, cut the margin offered to large chains to 14-15% from 23-25%, the executives said. They reduced it to 5-6% for standalone stores from 15-16%.Sangeetha Mobile has stopped selling Oppo and Vivo in Tamil Nadu due to margin issues, managing director Subhash Chandra said. “The two brands have different margins in different states, which is a problem for multi-state retailers,” he said.There is now no sales push for Oppo and Vivo, the CEO of a leading chain said.An Oppo India spokesman confirmed the margin changes and the drop in number of outlets. The spokesperson said some stores were no longer able to sell handsets after the goods and services tax was introduced — he did not elaborate. He also said Oppo has changed its strategy to focus on mid- to high-end models and some stores had to be shed when their sales didn’t match expectations.“Every market has a different policy and the margin is decided basis market dynamics... These adjustments are being done across markets by different smartphone industry players... All these decisions have been taken keeping in mind health of the company. We believe the company will now be healthier and efficient,” he said. Vivo India spokesperson said its retail network has not shrunk and the company plans to add outlets this year.“Last year, we witnessed good response from the market which contributed towards increase in revenue and market share. As per Counterpoint Research, Vivo V7+ commanded 40% share in ?20,000-25,000 segment in November 2017. We plan to further build on the growth momentum this year,” he said.The two brands have been forced to reduce margins in India because they are under pressure to become profitable, the CEO of a retailer said. “They are replicating the strategy adopted in China of slowing down the high investment after reaching a certain scale. But India is a different market and their share is already coming down,” he said.Both have drastically scaled down their huge marketing investment in India over the past three months in outdoor, television and print advertising, executives said.Vivo had a 9% share of India’s smartphone market in the third quarter of 2017 compared with 5% a year earlier, according to Counterpoint Technology Market Research, a Hong Kong-based firm that tracks device shipments. Oppo’s share increased to 8% from 4% during this time, Counterpoint said.Oppo currently manufactures phones in India through third-party vendors and is setting up its own unit in Greater Noida near New Delhi. Vivo has an assembling unit in Greater Noida with a capacity of 1-million smartphones per month, according to its website.Vivo India posted a loss of ?111.66 crore in 2016-17, according to regulatory filings, while sales grew six-fold to ?6,173 crore. Oppo’s earnings figure was not available, although its sales surged seven-fold to ?7,974 crore.Oppo and Vivo were among the fastest-growing smartphone brands in the third quarter of 2017, Counterpoint said.The industry executives said Oppo and Vivo’s pace of growth and market share will be under stress this year, which will change the pecking order of Chinese brands in the Indian market with Xiaomi and Lenovo-owned Motorola filling the space.It launched its own portal in India, marking its entry into the e-comm business.