A few days ago, after he had a conference call with the Indian team through whatsapp as usual, an Indian subordinate found him alone. "He has been with me for three years, but he has been upset recently." Li Yang told 21Tech. The employee complained that his friends had been accusing him of working for a Chinese company. "Although he said that he is nothing, but I feel that my Indian team's recent work enthusiasm is not so high, I think this is probably a relatively common phenomenon in India."
Most of Li Yang’s team in India has followed him for many years, and he also has a relatively good salary in the local area. This is to ensure that the current business maintains a relatively normal background. "More or less everyone has friendship, but they are afraid that outside (negative) emotions will easily cause followers."
Li Yang operates an e-commerce platform with hardware as the main commodity in India. For the past two months, it has been like a long roller coaster for him. After India has conditionally lifted the complete restrictions on the online platform, the platform ushered in a brief outbreak of consumption of mobile phones and component products, but it was unexpected. After that, a border dispute between China and India suddenly appeared, and Indian officials subsequently announced the "blockade" of 59 Chinese apps. Let him fall into the problem of user panic redemption again.
Standing at the crossroads opened in the second half of the year, the uncertainty has been further enhanced. Where does China's mobile phone industry chain go in India?
The threat of "broken supply"
"Now it should be said that it is in a period of extreme turbulence." Zhang Xin lamented that although the Indian government did not recognize it, the issue of customs clearance has actually existed for about a month.Zhang Xin is the head of a Chinese-funded precision structural parts manufacturer's factory in India. The Chinese-funded factories in India he has recently encountered are basically facing such difficulties.
"At present, a large amount of goods from Chinese-funded enterprises are stranded in Indian ports. Even components imported by Chinese manufacturers from Japan or other countries are directly imported into India, but they are still stuck." Zhang Xin told 21Tech, according to local authorities. It is said that all goods imported from the world to India need to be cleared and inspected. One is to worry about the inclusion of drugs, and the other is to prevent and control the new coronavirus.
"But in fact, our industry exchanges found that basically only goods related to Chinese-funded companies will encounter the problem of being stuck, and no one can successfully get out of customs clearance."
This phenomenon has since been confirmed more.
There was news in early July that the additional review of Chinese imports by India disrupted the operation of Apple supplier Foxconn's factory in southern India. However, on the 3rd, Foxconn’s parent company, Hon Hai Group, issued an announcement in response to the Taipei Stock Exchange, “All procedures related to the import and export of goods in India are applied to local customs in accordance with the regulations. At present, the customs clearance procedures for goods have been resolved. influences"
This actually opened up a serial dilemma, that is, short-term supply shortages may affect the next link in the industry chain. "If the issue of customs clearance of Chinese-funded enterprises continues to be unresolved, there may be a crisis of shortage of components in the industrial chain." Although the factory has started to operate normally in accordance with local requirements, Zhang Xin is not worried.
This is just a "new" challenge facing manufacturers in the Indian mobile phone industry chain. As India began outbreaking new cases of pneumonia in March this year, Prime Minister Modi subsequently extended the "closing country" initiative several times. Even though major mobile phone industry chain factories have been allowed to resume work at a rate of 1/3, the huge market capacity in India is probably a slack.
"From the perspective of policy trends, India will not be quickly unsealed in the short term, so for companies, working from home will certainly not reach half the efficiency of their working state." Zhang Xin analyzed 21Tech. In fact, this year, many Indian markets The changes have brought increasing pressure on Chinese-funded enterprises in India.
Although the app of Li Yang's company was not listed on the block list, the sudden action of the local authorities still affected them: a panic atmosphere from local users quickly spread.
"Recently, our users are worried that the change in their accounts will be blocked, and they have chosen to withdraw cash; there are also users who have begun to purchase large quantities of goods. At present, logistics in India is still very unsmooth. In fact, this effect is chain-like and bad." He Xiang 21Tech reluctantly said that at this stage, India's new retail platform can basically be defined as being in a downturn.
Under the influence of many uncertainties, Chinese companies in India can only wait cautiously for the next step.
Market in short supply
Over the years, the Indian market and China’s mobile phone industry chain have maintained a close relationship over the years, when they have gradually settled for the second largest smartphone market in the world.Especially under the “Made in India” strategy vigorously promoted by local officials, a large number of key industry chain manufacturers and complete machine manufacturers have successively opened factories in India. In recent years, due to the continuous adjustment of local tariffs and other policies, coupled with the huge local consumer demand, Undertaken by Chinese-based manufacturers, Chinese companies have further expanded their investment in India.
This has brought huge employment opportunities to the local market. A number of Chinese mobile phone industry chain manufacturers contacted by 21Tech have pointed out that the local team is set up, a few managers are Chinese, and other large production line personnel and customized R&D personnel are all from India.
In this way, the mature industry closed-loop has become the background of the rapid rise of the Chinese mobile phone industry in India. Canalys analyst Jia Mo told 21Tech that in the first quarter of 2020, Chinese manufacturers including Xiaomi, vivo, OPPO, realme, OnePlus, Transsion, Motorola, Huawei, Coolpad, TCL and even Gionee have already occupied the local market in India. 78% of the total share.
Figure: Consulting agency IDC statistics 2020 Q1 Indian smartphone market overview
"At present, some local leaders of large-scale groups in India have come out and said that they cannot be blinded by emotions, otherwise it will inevitably hit the local Indian economy. Therefore, we believe that some local representatives of different interests will not Tolerate this emotion to continue." Jia Mo pointed out to 21Tech.
Even under the influence of many uncertainties at present, if measured in an extreme state, the 78% share from Chinese manufacturers is not Samsung and Apple, or the local Indian brands Micromax and Lava can be "swallowed" smoothly.
"In terms of smartphones, if Chinese brands are excluded, there is no second brand with a large scale outside Samsung. Apple ranks seventh in the Indian smartphone market, with a market share of only 1.6% in Q1 this year, and local brands represented by Lava The proportion is only about 1%. Then only Samsung may choose." But Jia Mo pointed out that the current production capacity of all mobile phone manufacturers can only be restored to 1/3, which means that the local market is still in short supply. status. "This 30% capacity is seriously below demand."
Jia Mo further analyzed to 21Tech that although India has already been affected by the epidemic in the first quarter, the Indian market shipments are still increasing year-on-year against the background of global performance decline, indicating that local market demand still exists.
“Although considering the epidemic, India may face the background of rising unemployment and declining economic activity, but India’s best-selling mobile phone is priced at US$100-150, which is not very expensive and is not too much burden for users. The demand for replacement of low-end machines in the local market has been very strong." Jia Mo believes that no matter how much demand is reduced, it will not be reduced to the current production end can only be 30% of the original state, the short supply will almost continue during the epidemic The result of existence.
If the Indian government looks squarely at the status quo, the next step may be to comply with the market's need to conditionally relax the "stuck" policy on Chinese companies, but if it is to cater to the so-called nationalist sentiment, it may further aggravate market turmoil.
It should be said that the above market phenomenon is not a product of so-called "revenge" or "recovery" consumer demand. Jia Mo emphasized to 21Tech that in addition to Bangalore and other developed regions, India's epidemic situation is far from being controlled. Therefore, from the broader market, India's shipment data this year will inevitably fall to a greater extent than the same period last year, but the current data is still difficult to support the research and judgment of the trend in the Q3-Q4 period.
According to Canalys statistics, in the first quarter of 2020, the Indian market accounted for 77% of smart phone shipments under $200, mid-range machines with 200-600 USD accounted for 21%, and the high-end machine market accounted for only about 2% . "Therefore, the market pressure under $200 will be greater. Most of these users may be unstable labor. Once they lose their jobs, their demand will be affected. Of course, at present, it is more difficult to say." Jia Mo analyzed.
