Chinese handset companies are bracing for tough times in India and have started reducing their manpower in the country. They are likely to further reduce their investments towards marketing, operations and hiring amid ongoing scrutiny from the local government.
According to a report by the Economic Times, Chinese smartphone brands have already laid off around 600-800 employees and are preparing for more layoffs in coming months.
Falling demand for handsets coupled with macroeconomic dynamics in the market may also impact their plans next year, the report added.
Xiaomi, Oppo, Vivo and Realme are among top five brands in terms of shipments in India. Chinese brands make up around 80% of India’s smartphone market.
Top executives are also leaving
Senior executives in sales and marketing verticals are voluntarily leaving these companies, the publication reported, citing sources.
“Top-end executives, particularly in the sales verticals, face uncertainties, fearing lofty targets that they may not be able to achieve, along with shortage of staff. Most sales functions in smartphone companies are tied to incentives, which forms a big chunk of their compensation,” a Maharashtra-based retailer was quoted as saying by the publication.
In India, smartphone brands typically start planning and projections for the upcoming year from October-November. However, with the ongoing issues with the Indian government, they aren’t really committing numbers to investment in marketing and distribution for the next year.
IDC India has already predicted a decline of 8-9% in shipments in 2022 after a muted fourth quarter. That means growth and profitability of Chinese companies may not be a sure thing next year.
Chinese handset firms endure scrutiny
Notably, candidates have also started rejecting offers from Chinese handset companies amid continued scrutiny over strict data protection policies.
Sanjay Shetty, director, professional search & selection and strategic account management, Randstad India, said that new candidates are becoming wary of choosing employers who are under the microscope.
India’s tax and anti-money laundering agencies have been investigating Xiaomi, Oppo, OnePlus, Huawei and ZTE. According to a previous media report, the country’s Ministry of Corporate Affairs (MCA) registered more than 700 cases against companies with Chinese nationals as promoters and directors over suspicious transactions or dubious credentials.
Chinese handset companies have deep footprints in the offline sales channel of the Indian smartphone market. The report suggests that these companies have already reduced their workforce significantly in the offline channel. These employees are typically employed through retail partners, but get financial support from handset brands.
“There has already been a 30% reduction in workforce over the past one and half years, and this is expected to accelerate in 2023 amidst fears of volatile economic conditions. The biggest impact will be on front line workers employed by the brands to man retail stores and push their products to customers.” an industry source was quoted as saying.