China’s leading smartphone-maker Huawei is setting up shop in India

Opening up the market.
Opening up the market.
Image: Reuters/Rupak De Chowdhuri
We may earn a commission from links on this page.

Taking a cue from Indian prime minister Narendra Modi’s manufacturing push, Chinese smartphone maker Huawei has learned that to make it in India you have to ‘Make in India.’

Huawei is the third-largest smartphone maker in the world, but it hasn’t been able to gain a strong presence in one of the biggest markets because of stiff competition from large competitors like Samsung, as well as smaller brands like Lenovo and Xiaomi. To give its business a local boost, Huawei is opening a manufacturing plant in Chennai, where it will assemble smartphone parts for the local market starting in October, the Wall Street Journal reported.

By the end of 2017, Huawei told the Journal it expects the Chennai site to churn out 3 million phones per year. The company had applied for a license to produce in the country 19 months before the government finally greenlit its operations in July, Reuters reported. It’s also ramping up its presence in India by adding 50,000 outlets to its retail network by the end of this year.

The number of smartphone users in India is expected to reach 990 million by 2020, up from about 800 million in 2015, according to Cisco. Since markets like the US and UK are close to saturation, and growth in China is stagnating, smartphone companies are looking to make headway in India. In 2015, China’s other smartphone giant, Xiaomi, partnered with Taiwan-based electronics contract manufacturer Foxconn to start assembling phones in India. Xiaomi’s sales grew by 72% over the last two years in the country.

“The vendor ecosystem in India is not as strong as it is in China,”Anshul Gupta, research director at Gartner, told Reuters. “A lot of things still need to be imported from China when it comes to things like electronic components, batteries, display or others, but I am sure as the market progresses, we will start to see true manufacturing happening here in India.”

Huawei doesn’t feature in the top vendors in the Indian market yet, but the brand has spread to other parts of the world—almost half of its shipments are already going outside of China, according to research firm International Data Corporation (IDC). Its worldwide sales are exceeded by Apple and Samsung, mostly because it hasn’t been able to penetrate the huge US market yet. Four years ago, Huawei was effectively banned from entering the US network equipment market after being labeled a security threat by US officials. It has slowly been making its way into the US consumer market.

In India, it has a relatively easier path. There, Samsung is a hit with low-cost device users, but Apple is struggling to entice consumers because of its expensive handsets and inefficient distribution. Huawei strikes a balance: The company has a diverse offerings of phones, ranging from Rs 2,990 ($44) to Rs 46,900 ($700), serving different strata of society.