As the market reaches saturation in China, Chinese smartphone makers are moving to their next target: India.
Research group IDC said Monday that Chinese phone sales fell 4% from the first quarter last year, the first contraction in six years, with only 98.8 million phones shipped. IDC also predicts no growth in the Chinese smartphone market in 2015. With more than 800 million people using smartphones in China, few are buying new phones. In addition there is already a large build up of product from the end of last year. And the overall slowing economy in China doesn’t help.
So why move on to India? In population and number of users, India most closely resembles the Chinese market at its height, with hundreds of millions of potential new customers.
But the potential competition is intense, too. More than 150 brands currently sell in India, including several native-to-India brands with inroads in the market. Multinational Samsung has already made a decent foothold as well.
Still, Xiaomi, the most successful Chinese company in India, owned about 4% of the market in the fourth quarter, and the sheer scale of potential customers could make the venture profitable for many. India is expected to buy 111 million smartphones this year and 149 million in 2016. And Indian customers are similar to Chinese customers in that they enjoy lots of technical features and are highly sensitive to cost.
So far, Chinese manufacturers have had the most luck with “flash sales,” wherein the company targets customers with online offers of limited quantity and duration. This cuts down on the costs companies have to pay for things like storefronts or distribution deals.
For the moment, Apple remains the top smartphone vendor in China, thanks to the iPhone 6 and iPhone 6 Plus. Xiaomi held second place, and Huawei, another Chinese vendor, was at number three. What effect the shift toward the Indian market will have remains to be seen.