Hello India, Samsung’s not done with you yet

Still here.
Still here.
Image: AP Photo/Rajesh Kumar Singh
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In 2017, Samsung lost its pole position to Chinese rivals in the world’s second-largest smartphone market. Now, it is fighting back.

Today (July 09), the South Korean electronics major opens a new 35-acre manufacturing facility in Noida, near New Delhi. The plant will nearly double the company’s capacity in India from the existing 67 million handsets to 120 million.

The opening of this new facility comes just a year after Samsung committed a massive Rs4,915 crore ($717 million) investment to double its smartphone and refrigerator production capacity in the country.

Increasing local production will allow it to rack up volumes and reduce the time taken to introduce newer models.

“Much of Samsung’s competition depends largely on their (production) base in China. This (new unit) will definitely give Samsung an edge to reduce its time to market and localise innovation,” said Jaipal Singh, senior analyst at International Data Corporation (IDC). “One thing is very clear; Samsung can’t afford to lose the India battle,” he said. After all, he added, the country is still the largest market for Samsung smartphones in terms of volumes.

Staying afloat

Six years ago, Samsung became the undisputed smartphone leader in India. Last year, however, its position was shaken.

“In the sub-$150 (affordable) category, Samsung is facing huge competition from Xiaomi because it has not been able to capitalise on e-commerce channels aggressively,” said Tarun Pathak, associate director with Hong Kong-based Counterpoint Analytics.

In 2017, Beijing-based Xiaomi toppled Samsung as the market leader in the affordable segment, growing its market share from just 6% to 22% within one year.

Other Chinese brands such as Vivo and Oppo have also gained steam, eating into Samsung’s consumer base.

Among premium smartphones, too, the Chinese are giving Samsung a run for its money.

Shenzhen-based OnePlus, which debuted in December 2014, captured 48% of the premium segment in India by February 2018 through attractive pricing and a unique word-of-mouth marketing strategy.

Other rivals, too, have rolled up their sleeves. For instance, Apple, which still holds less than 3% of the Indian pie, has been taking steps to make deeper inroads. Besides eyeing direct stores, it is reportedly looking to locally make the iPhone 6S in a bid to lower costs.

But Samsung’s reign may not be over yet.

When India hiked the customs duty on imported phones from 15% to 20% earlier this year, the likes of Apple were hit hard. Samsung, with a long-standing manufacturing presence in the country, escaped largely unscathed, Pathak said.

As for the OnePlus threat, “Samsung is not aggressively present in the Rs30,000-Rs40,000 segment. Maybe it can position some products there,” Pathak added. “Samsung still has a strong brand image and the overall selling price of the smartphone market in India is moving up.”