Chinese smartphone companies reboot as rivals creep up the screen

With their once-dominant market shares coming under challenge from Apple and Samsung, among others, and their brand image hurt due to intense government scrutiny, top Chinese smartphone brands are scrambling to protect their turf in the Indian market by strengthening their presence in offline retail, roping in brand ambassadors, launching new initiatives, and focusing on product quality.

These strategies are causing a marked shift in the way these Chinese brands are operating in India this year where smartphone demand has weakened amid higher product prices and economic uncertainties, brand experts and market trackers said.

Experts feel that this is also a good time for new entrants such as Nothing and Google to get a foothold with relatively lower entry barriers as compared to other markets.


Increased scrutiny by Indian authorities and tepid demand for higher volume smartphones costing less than Rs10,000, where Chinese brands have a major presence, has seen the combined share of these products drop to 61% in Q2 2023 from their peak of 77% in Q1 2020. In the same period, the combined share of global brands such as Apple and Samsung rose from 17% to 27%.

“Most of the Chinese brands have become persona non grata in the Indian market due to the country-to-country relationship that came into question with China…The Chinese companies are trying to play the price war but are facing competition from Samsung in the middle-of-the-pyramid, and Apple at the top,” said Harish Bijoor, a business and brand strategy consultant.

Bijoor added that India has become a smartphone upgrade market as the number of new users is declining. This has come as a double whammy for Chinese brands whose market expenses are rising while sales volumes are declining.

The brands are now focusing on increasing their profits and revenues by selling more premium smartphones that yield higher margins. There has also been an increased focus on offline expansion and setting up direct-to-customer channels which includes own web stores and experience centres, said Faisal Kawoosa, chief analyst at TechArc.

"Changes are inevitable and companies like ours are always prepared to face any challenge. Our current India management team is efficiently navigating the firm through the growing markets," said a spokesperson for Realme, which recently saw a leadership change. "With our “Spire Strategy”, we have elevated each product series by seamlessly incorporating cutting-edge technology into our holistic and all-encompassing product range."

Kawoosa added that brands have now started to spend more on advertisements on Amazon than on Google Search, with an increased focus on performance-based marketing. This means dedicated space on e-commerce platforms to showcase their products, besides using social media influencers and branded content to maintain mindshare among consumers.

Goldman Sachs highlighted in a research report that the top Chinese brands such as Xiaomi are relying on high price-performance ratio, and local manufacturing presence to bolster brand image, while roping in Indian actors as part of their brand strategy, besides expanding their own online and offline stores as part of the channel strategy.

"We've recognised the significance of the offline retail market, particularly in recent quarters, and focused on harmonising our efforts in strengthening our relationships across online and offline channels," a Xiaomi India spokesperson said, adding the company has more than doubled its promoter count and optimised retail operations.

This followed a decline in Xiaomi’s marketshare over the past few quarters that saw the company cede its leadership position in Q3 2022 and become the fifth-largest smartphone company in India as of Q2 2023, according to IDC India. The period also saw the firm come under Indian government scrutiny for alleged foreign exchange violations.

The Xiaomi spokesperson said the company’s strategic collaboration with brand ambassadors was a big step towards enhancing its connection with the masses, with famous Bollywood faces roped in for their mass appeal and glamour quotient.

Similarly, Oppo and Vivo, who are also under facing government probes for alleged unlawful activities, are focusing on quality to uplift their brand image, besides advertisements and sponsorships as part of the marketing strategy and to grow its online and retail footprint.

Oppo and Vivo didn't respond to ET's emailed queries.