Recently, we saw a very interesting, and for Smartphone and Telecom trade pundits and employees, monumental occurring – a recent report of marketshare showing that the top 5 brands in the Indian Smartphone market are not Indian. On top of this is a constant lament by Media and Telecomists {to coin a new term} alike, that Indian Handsets Brands are not making it; that Indian manufacturing is not picking up in this industry.
Let us try and place things in perspective first, before we try and understand what can be done to improve the situation; or, indeed, whether it can be improved. In this article, I focus only on the perspective, and an overall market analysis of the two markets in general terms as well as specifically Teleocm / Device terms. After that perspective, I then introduce the basics of the competitive scenario. The reason for that is you need to understand the two markets and their difference to make a meaningful comparison, as well as figure out the way forward.
FIRST, NUMBERS & COMPARISONS
Let us get something straight : we cannot compete against China as things currently stand. This isn’t pessimistic thinking, but a simple statement of facts. You cannot compare chalk and cheese, or as some like to state, apples and oranges. India is a low-income market, while China is approaching middle income levels. Indian Per Capita Income is dwarfed by the Chinese income. As of April 2015, Nominal GDP per capita of China was $11449, while India was at $2672. If you take PPP, even then we are dwarfed : $20004 vs $9327. There is simply no comparison feasible between two markets with such a comparative economic scenario; we are doing ourselves a massive disservice by comparing
Be it Steel Industry or Handset Industry, India is dwarfed in numbers, and this is something that is not going to change anytime soon. The markets as well as the manufacturing scenarios are completely different; China is a nearly 100 Billion dollar Smartphone market, with production in excess of 600 Million units in 2015, although 2016 may see a slight dip. Exports account for more than 2/3rds of these numbers – even so, you are looking at numbers in excess of 140 Million Handsets in 2015, which though comparable to India’s 100 Million plus/minus a few, is still a larger market. Of greater relevance is the footprint of Chinese Exports, which are 450 Million plus – and that is one hell of a lot.
A DEEPER ANALYSIS
Moving on, the higher numbers in terms of dollars for the Chinese gives them enormous financial clout, flexibility and strength to innovate. Also note that there is a price differential of a full 100-plus dollars in the average sale price of a smartphone in India vs China. That means, China is a more mature Smartphone market than India. Three, Smartphone penetration in China is also much higher, in excess of 68% - there were 913 Million Smartphones in China in 2015, and 691 Million unique users. China had 208 Million Smartphone users way back in 2012! In & by 2016, 50% of China’s population had internet connectivity – a figure we are nowhere near. The internet advertising market in China is 3 times India’s.
I could go on; but I think the generic and the industry numbers quoted above or indicated above give a reasonably good feel of the two markets – India vs China. It stands to reason that the Chinese players will be more mature, with a better handle & understanding of the technology involved, with deeper pockets and a larger range of products. They are also ahead on the learning curve, and have been growing right in step with the technological developments in the trade; we are only now catching up in terms of keeping abreast in the technological space.
2010-2012 were the critical years for the Smartphone trade, with a rapid evolution in technology, a massive churning in the competitive space. These two factors combined to heat up the smartphone market from 2008-9 onwards, give or take an year. And the numbers tell us that the Chinese market was following closely on the heels of these developments; thus, making any India-China comparison an exercise in futility, and despondency if we are trying to outcompete them playing on their turf!
They have the money and the deep pockets; they have the manufacturing investments; they have the infrastructure; they have the competence in the industry in terms of economies of scale and captive markets as well as a much wider experience in the technology; they have the technology; they have the processes; all of these add up to a significant advantage. There is no point in beating around the bush; we cant beat them– so long as we are playing to their strengths. This does not mean we cant compete; our competitive response has to be formulated basis our market realities. This is what I look at in the next article, wherein I spell out the ground realities of the smartphone market and consumer in India
References :
Comments
Post a Comment