Chinese smartphone manufacturers have seen a 3.4 times year over year growth in market share in India. (Source: Reuters)

Chinese smartphone manufacturers have captured 51 percent of the mobile phone handset market share in India according to a report. In the meantime, Indian smartphone makers have been adversely affected due to the rapidly increasing market share of Chinese players and fierce competition. A rating agency, India Ratings and Research (Ind-Ra) has said that Chinese manufacturers have seen a 3.4 times year over year growth in market share. According to the report, there is a complete change in the market position of the top five smartphone players in 2017. Indian companies like Micromax, Lava and Karbonn have been replaced by Chinese counterparts like Xiaomi, Vivo and Oppo.

Meanwhile, global electronics giant Samsung still remains the market leader with 28 percent share in the market, but the share of Indian vendors downsized to a mere 14 percent from 40 percent last year, according to the report. Lenovo has sustained its position due to the established brands and products in the diversified price segments. Oppo and Vivo India have recorded sales increases of seven to nine times this year respectively. The report by Ind-Ra expects Vivo and Oppo’s smartphone sales to rise by around 40 percent to 50 percent by 2018.

One of the biggest reasons for a boost in the sale has been attributed to Reliance Jio. The report said that Jio’s free data and voice services during the year pushed up the 4G Volte enabled smartphone demand. While average data prices dropped, it provided a stimulus to smartphone sales. Even the incumbent telcos also offered differentiated data offerings for 4G smartphone users, hence pushing a higher smartphone replacement demand as well as a faster migration rate from feature phones to smartphones. The Chinese companies saw this as an opportunity, and with aggressive marketing and competitive pricing strategies. they captured the budget and the mid-price segment which lead to market share gains. These reasons are in addition to various other factors, including superior product quality, big advertising expenditure, and debt-light capital structure in China, the report claimed.

Chinese players like Xiaomi has invested a lot in brand building and manufacturing facilities in India and that shows their long term strategic intent. Ind-Ra report says that established Indian vendors will face difficulty in sustaining, despite the early mover advantage and a more diversified product profile. Indian smartphone makers have been slow in reacting to ongoing product innovation in the market, and are further constrained by limited marketing budgets.