Micromax to take on Chinese dragon on own turf

news
03 June 2016

Having successfully fended off Chinese competition at home, Gurgaon-based handset maker now plans to take on the dragon on its own turf.

The company is planning to enter China next year, Micromax co-founder Vikas Jain said at the RISE conference in Hong Kong on Thursday.

Jain said Micromax believes China to be an important market in future given the size of the phone business in that country. Also to ensure that it is well-equipped to take on companies like Vivo, Huawei, Oppo, Xiaomi and Lenovo, Micromax would raise additional funds in the next two years, either privately or by going public.

Though China is the world's biggest smartphone market, it may not be an easy one for Micromax. Nearly 500 million phones were sold in China in 2015 and Micromax definitely believes that it can get a slice of this burgeoning market. While there are a lot of similarities between the Chinese and Indian market - value conscious buyers and the same set of companies - the software and the hardware that goes inside the phones in China can vary significantly compared to phones sold in global markets, as India Today points out.

Entering China is also tricky for an Indian company like Micromax because the Android phones sold in China don't have the Google Play store installed on them. Instead the version of Android on most Chinese phones is heavily modified and has many local components.

In comparison, it is easier for Chinese companies to enter other markets such as India. In the last few years a lot of Chinese phone makers, including Xiaomi and Lenovo, have focussed heavily on India and have managed to make inroads into the segments of the market that were once ruled by Micromax.

The Indian company is still the second biggest in the country behind Samsung, but its growth has slowed down steadily in the last couple of quarters. "Micromax retained second position in Q1, 2016 with 6.9 per cent growth over the same period last year. However, shipments fell 17.9 per cent sequentially for the second consecutive quarter as volume dipped sharply in the entry level sub- $75 segment," IDC had noted recently in its market report for India. Micromax, according to IDC, has 12.6 per cent market share in India.

The company is obviously aware of all this. In April, the company announced that it was re-branding itself and was changing the business strategy to deal with the challenges. Since then Micromax has launched several new products across categories - phones tablets, laptops etc - to rekindle the growth. Yu, which is a sub-brand of the company looked after by co-founder Rahul Sharma, has also launched the Yunicorn, a new device aimed at competing with the likes of Xiaomi and Lenovo in India.

However, if Micromax is finding it difficult to compete with Chinese companies in India, in China it may find the market even more challenging.

In the market report for the first quarter, IDC had noted that Xiaomi and Lenovo were no longer among the top 5 companies in the world, mostly because of the hit they took in China.

 





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