New Delhi: Chinese smartphone brands are seeing volumes go up once again after falling from a peak in 2020, despite continuing government scrutiny. But their cumulative revenue share is falling amid the strengthening premiumisation trend as iPhones and Samsung devices are favoured by customers at the top end.
The cumulative market share of Chinese smartphone brands - Xiaomi, Vivo, Oppo, Realme, Transsion, Motorola - rose to 75% in the March quarter, after hitting a low of 61% in the July-September period, according to Counterpoint Research.
This was achieved on the back of a shipment rebound by the top brands such as Xiaomi and Vivo after a few tepid quarters in 2023 due to low demand and inventory bottlenecks, the research firm said. It added that smaller brands such as Motorola and Transsion have also expanded their footprint in the market.
Chinese Cos Dial Into Offline Sales
The current volume share has inched closer to their peak of 77% achieved in Q1 2020, before geopolitical tensions between Beijing and New Delhi disrupted their operations.
This had since triggered a series of probes by various government agencies and even arrests of executives at the Chinese brands.
"The government scrutiny and investigations on the top brands did not have any impact on sales, as consumers remained mostly indifferent, opting for the Chinese brands for the value for money they offered on their products," said Tarun Pathak, research director, Counterpoint Research.
Chinese smartphone brands have been maintaining a stable volume share in the value-for-money segment (the ₹7,000-25,000 price band, as defined by Cybermedia Research), where their market share has been 70%-plus (73% in Q1 CY24 vs 76% in Q1 CY20), even as their share in the sub-Rs 7,000 segment went down to 5% in Q1 CY24 from 22% in Q1 CY20, CMR data showed.
The cumulative share is now increasing in the premium segment (₹25,000-50,000 as defined by CMR) - from 2% in Q1 CY20 to 18% in Q1 CY24.
Nearly every Chinese smartphone brand saw shipments grow in the March quarter - Xiaomi was up 28% year-on-year driven by a leaner and streamlined portfolio and proactive offline channel strategy. Those of Motorola surged 58% year-on-year, driven by demand for attractive designs and a smooth Android experience which the brand has leveraged, said market trackers.
Similarly, Transsion brands (Infinix, Tecno, and Itel) grew 28% year-on-year after increasing their focus towards offline channels and offering premium hardware in the affordable segment.
This, as opposed to 2023, when macroeconomic headwinds and low demand in the budget segment hurt channel inventory levels, leading to a sharp decline in the cumulative market share of Chinese handset brands.
An executive at a Chinese smartphone brand who did not want to be named said close ties with channel partners and distributors meant they could function without much disruption in the market. "You will see that despite an investigation by the government in our company since 2020, our market position has only strengthened," the executive said. "That is primarily because we take care of our retailers and distributors, offering them the right support. Our customers too are loyal to the brand, which has also helped us gain space in the premium segment."
The year 2023 saw South Korea-based Samsung gain the top spot with its strong offline presence at the expense of Xiaomi, which dropped significantly. The latter has now climbed to second, closely trailing Samsung, according to CMR, on the back of a revamped business model centering around offline retail.
However, in the same time period, the cumulative revenue share of Chinese handset brands has slumped to 48% in Q1 CY24 from 70% in Q1 CY20, said research firm Cybermedia Research (CMR), with the likes of Apple and Samsung gaining due to the strengthening premiumisation trend seen in the smartphone market.
"The post-pandemic era has witnessed a surge in demand for premium smartphones in India, prompting Chinese OEMs (original equipment makers) to adapt their strategies," said Prabhu Ram, head, industry intelligence group, CMR. "Previously focused on capturing the affordable and value for money smartphone segment, these OEMs are now increasingly venturing into the premium end."
While the revenue base has widened since 2020 due to the premiumisation trend, the inability of Chinese brands to crack the segment has resulted in a fall in revenue share, Pathak said.
"OnePlus used to be one of the largest premium players, but its portfolio was diluted with mid-range and budget smartphones, leading to a fall in their share," he said. "The likes of Xiaomi and Realme, on the other hand, have traditionally played in the volume-heavy budget segment which has seen a decline since 2022, resulting in a fall in their revenue share."
In the quarter ended March, Samsung led the market in terms of value, cornering nearly one-fourth share, Counterpoint said, attributing this to a stronger mix of premium devices in its portfolio backed by the popularity of its financing schemes.
Apple, too, had a record quarter in India, in terms of value, leading the premium segment (above Rs 30,000) both in value and volume terms, the research firm said.
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