Adversities of Nationwide lockdown on Smartphone Industry
The nationwide lockdown due to the coronavirus has affected business of all smartphone manufacturers in the country as they had to suspend the operations completely. Shutting down of smartphone manufacturing plants has given some tough times to brands like Vivo, Oppo, Xiaomi and more.
Last year, India, has seen some massive gains in the global smartphone production due to the us-china trade war, but it seems like, all could be lost that is to the coronavirus. According to some market research reports, the estimated loss due to the present production scenario in smartphone companies will put India four years back from its current share in global production, which has risen massively in recent years, owing to government’s Make in India initiative.
Some media reports also suggest that India’s share jumped to 16 per cent in 2019 from 9 per cent in 2016, all thanks to handset makers moving production out of China, along with financial incentives by the Indian government.
All of this could be lost in 2020! If India’s share return to 2016 levels. export losses could be covered by spare capacity, but whether local Indian demand will make up
the difference is unlikely.
Industry Insight
The coronavirus pandemic continues to be a growing threat not only in India, but across the world, it has deprived us of our regular everyday routine, leading us to stay at home, trying to cope with this unprecedented situation.
With mobile phones falling outside the definition of essential products, everything from manufacturing to sales and distribution has been at a standstill for over a month now. But with lockdown conditions across much of India now somewhat eased, some parts of our lives can begin to get back on track.
Smartphone manufacturers like
Vivo, Oppo and Xiaomi, has now mutely started their operations in noida factories, and looking to get back on track as soon as possible.
The last couple of months has been bad for nearly all kinds of business, and the next quarter reports are expected to show an unprecedented result of the smartphone industry. Companies and analysts are predicting that the second half of this year will be better in terms of sales figures. Some are already seeing things going back to normal, with manufacturing units resuming work and sales on online portals. However, still, several questions remain the same.
When Mymobile asked the smartphone brand, Tecno, a subsidiary of Transsion Holdings, about how the company is holding up with the lockdown situation it said, “Tecno India as a brand has prioritized the safety and well-being of our consumers, employees, partner
network and the communities that we operate in.”
The spokesperson added, “We are closely monitoring the on ground developments on a daily basis, and are working with multiple stakeholders at the national and local levels, to ensure a healthy ecosystem to operate in, as the lockdown hopefully continues to ease out.”
Other companies like Realme, has been particularly affected. The company launched its new narzo series during the lockdown with planned online sales. Madhav Sheth, Realme Vice President and Realme India CEO in a statement reported by media said, “Smartphones have now become a necessity, so the overall number of smartphone sales in India in 2020 should not be influenced much. The lockdown at most will delay consumers’ purchasing but won’t stop it.”
The company is extremely optimistic that the demand of smartphone will only be impacted initially, but will soon go back to normal, in less than a quarter. And we can also expect that purchasing behaviors would be shifted from higher, premium price segments to more budgetfriendly segments.
Another very prominent smartphone brand in India, Xiaomi, is also finding ways to stay open for business in the country amid the coronavirus outbreak.
The Beijing-based company launched a “Delivery on Call” service, during the lockdown, which allowed shoppers to call up their closest Mi Home store and order a smartphone for home delivery. These efforts came just sometime before the company launched its premium segment smartphone, Mi 10. This handset is crucial because it comes with a higher price tag than its other affordable devices, placing the Chinese manufacturer in the premium arena alongside Shenzhen-based Oneplus and Apple’s iphones.
What perhaps works in the favor of all smartphone companies in the country that, they are not alone in facing the wrath of the pandemic. The entire smartphone industry is in flux.
Consumer Interest
Amid Lockdown, the consumer interest and spending capacity was at test, and some market research shows that the interest and capacity both have massively increased in the country.
According to a market research from Counterpoint, amid lockdown the smartphone market grew to 4 per cent in Q1 2020. A total of 31 million units were shipped in first quarter. In comparison, India smartphone market grew 7 per cent from Q4 2019.
Because smartphone is the only way people are connected around the world, that is why the consumer demand is at peak specially now, which gives the companies opportunity to come out with more affordable devices in the country to make a difference in their sales afterwards.
However, with social distancing norms, factories running at lower capacities, restricted deliveries, the consumer demand will have a larger impact on smartphone sales initially, as people will focus on saving and therefore limit discretionary purchases.
But the sales are expected to grow in the second half of the year for sure!
Meanwhile, the China’s economy
There is no doubt that the lockdown will affect the business and revenue around the world. But, still, there are chances that more companies will invest in India as most of them are planning to shift their operations from China to the other parts of the world.
This whole situation has given the industry to think about having backup options, and it gives India a sure shot chance to emerge as a leading manufacturing hub after China.
It’s not only the coronavirus that has affected the confidence of companies in China, the us-china trade war has also provoked global brands and companies to think about shifting their factories from China.
What’s Next
The unprecedented times are in front of us, there is no saying whether this all will be over next month, or we must learn to live with it for some time. The smartphone industry is obviously gearing up to be back on track as there has been enough losses.
Once the lockdown lifts completely, the actual figures and actions will come into force. With the persist lockdown in the country, the opening of the economy will also take its own sweet time, smartphone makers will have no option but to write off Q2 2020 from their list — a big blow amid supply-demand uncertainty that may last for several months, usurping the all-important festival season.
But as the winter always turn into spring, it will all be over one day! ■
pahi@mymobile.co.in