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Smartphone rivalry heats up in India

News, 20 June 2016

NEW DELHI: Indian smartphone vendors are facing a growing challenge from Chinese rivals, who are reported to be making significant inroads in the Indian market because of their "aggressive marketing".

As reported by The Economic Times, industry insiders say the relatively new entrants from China are focusing on the offline market – and succeeding – by paying higher channel commissions.

One unnamed media executive revealed that rates for key brand placements on some popular TV programmes, such as the Indian Premier League cricket tournament, have increased by as much as 40% within a year and much of this is being driven by the marketing spend allocated by Chinese smartphone brands.

These brands include the likes of Vivo, Oppo, LeEco and Gionee, which have doubled their adspend so far this year and are making the competition intense for Indian brands that operate on slender margins.

"Indian payers, which usually operate on 2-3% margins, are facing tough competition from Chinese players," said Tarun Pathak, a senior analyst at Counterpoint Technology Market Research.

"Further, online-only Chinese players are willing to sacrifice margins, even go into negative margins," he added.

Chinese smartphone manufacturers are also making headway by paying Indian shopkeepers to redesign their shopfronts to carry their brand names, it is reported.

"Tapping the retailers for a branding opportunity is a great idea which is proving to be effective for us," confirmed Vivek Zhang, CMO of Vivo India, which has built up its branding presence across 10,000 retail outlets.

However, while some Indian brands may feel they could be forced to match the adspend of their Chinese competitors, Micromax, the leading Indian handset maker, believes the Chinese approach is ultimately unsustainable.

Shubhajit Sen, CMO at Micromax, said: "We've always maintained that significantly high advertising spends and trade margins to gain short-term market share is unsustainable – especially true in the current scenario where overall industry margins are under pressure."

Data sourced from Economic Times; additional content by Warc staff