Korean brands see bigger opportunity in India amid anti-China sentiment

Korean smrtpone brands India
Photo by Joshua Woroniecki

Korean handset makers Samsung and LG are getting aggressive in the Indian smartphone market sensing a window of opportunity to reclaim lost market share from Chinese companies amid the https://disruptive.asia/india-bans-chinese-mobile-apps-border-crisis/ongoing anti-China sentiment.

Both Korean companies have quickly launched new mid-range smartphones for Indian consumers to address the immediate demand in the market. With this aggressive strategy, LG is preparing for a comeback in smartphones, while Samsung is looking to reclaim its numero uno position in the Indian market.

According to analysts, the mid-tier segment or the Rs 10,000- Rs 20,000 ($135-$270) price segment is seeing the majority of demand due to a reduction in consumer spending due to Covid-19 as people save money for essentials.

This comes at a time when home-bred handset makers like Micromax, Karbonn, and Lava are also planning a comeback in the smartphone space. All three players had left the smartphone segment due to intense competition from Chinese brands and had limited their respective operations to just feature phones.

However, home-bred brands will focus on entry-level or Rs 6000-Rs 10,000 ($80-$135) price segment for smartphones. 

Market trackers like Counterpoint Research and IDC said that there has been an uptick in demand for Samsung and LG smartphone in India, driven by the pent-up demand and anti-China sentiment. 

LG has claimed that it has seen 10 times increased sales of smartphones in the past two months due to the anti-China sentiment, according to a report by the Economic Times.  

To continue to momentum, LG is now preparing an ‘India specific and India first’ smartphone range, which will include six new smartphones, and is also ramping up its distribution across online and offline channels.

Market analysts are of the view that conditions in the Indian smartphone market is very fluid and offers new opportunities to every non-Chinese brand including Finland’s HMD Global and Taiwan’s Asus.

They, however, reckon that non-Chinese brands need to aggressively focus on improving their presence on the online or eCommerce channels. Samsung and LG have historically been focused on the offline channel, while Chinese brands opted for online channels to save costs and quickly gained market share.

According to Counterpoint Research data, Chinese smartphone players had 81% share in the overall smartphone market in the January-March quarter of 2020, while in the online channel segment, their share was even higher at 85% in the quarter.

Consumers are increasingly looking to go for an online purchase instead of going to an offline shop due to Covid-19 related concerns. 

Xiaomi, Vivo, and Samsung held 30%, 17%, and 16% market share respectively in the January-March quarter, Counterpoint Research’s data revealed.  LG had less than 0.5% market share.

In addition to the anti-China sentiment, Chinese handset brands are experiencing manufacturing and supply chain disruption in India. Oppo’s factory, which also makes phones for Realme and OnePlus, hasn’t been operational since mid-June after its employees tested Covid-19 positive. Even Foxconn’s factory in South India, which makes phones for Xiaomi, is running on low capacity.

Samsung, on the other hand, managed to keep its manufacturing facility running at 40% capacity, which coupled with existing unsold inventory from October-December 2019 quarter, helped the brand to quickly serve pent-up customer demand. 

Samsung, which has a more diversified supply chain compared to Chinese brands in India, has its manufacturing facility in Noida, Uttar Pradesh, India. LG, on the other hand, has a partnership with contract manufacturers to make handsets in India.

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