India bans import of mobile phones, milk, steel products from China190 views
NEW DELHI: India has banned import of milk and milk products, certain mobile phones and a few other items from China after finding them sub-standard or not following security codes.
Commerce Minister Nirmala Sitharaman said in Lok Sabha that India banned import of milk and milk products from China as their quality was unacceptable.
The Minister said India’s trade deficit with China stood at USD 48.68 billion during 2015-16 (April-February) and the total bilateral trade was USD 65.16 billion during the period.
“Increasing trade deficit with China can be attributed primarily to the fact that Chinese exports to India rely strongly on manufactured items to meet the demand of fast expanding sectors like telecom and power, while India’s exports to China are characterised by primarily and intermediate products,” she said.
Around six to seven years ago, Chinese smartphone brands were not very active in India, but today, this no longer seems to be the case. According to Counterpoint Research, India has pipped America to become the second largest smartphone market on the planet. This has been accompanied, if not helped, by a steady influx of Chinese brands to India, which has happened for a variety of reasons. Let’s take a closer look at them.
1. Saturation in China
One of the most obvious reasons for this is that the Chinese market is not growing quickly anymore. By 2013, the Chinese smartphone global market accounted for about a third of global smartphone shipments meaning that it has great scale. In the early years, this market also had great growth, but over time, this has slowed to a crawl.
To continue growth, Chinese brands needed to venture into international markets. As the second largest market behind China, India is a natural destination, but there were some other reasons why it’s become a focus area for Chinese firms.
2. Easier distribution than the US
The other reason why Chinese manufacturers are looking to sell in India these days is because distribution here is a lot simpler for foreign companies than it is in the next largest market, the US.
Although the US was the number two market after China for a long time, most brands saw it as a tough nut to crack, as both Apple and Samsung cemented their positions as lead players. What’s more, the nature of the US market is quite different from that of China. In the US, carrier stores are the primary source of smartphone sales.
As seen above, almost half of all smartphone sales in US occur through carrier stores. For a manufacturer to succeed there it requires a strong relationship with the carrier; this shortcoming is what hurt Sony’s prospects in the US. What’s more, being showcased in a carrier’s store also means being certified by the carrier – a long and expensive process.
On the other hand, sales in India take place through independent retailers, or chains such as Sangeetha Mobiles, The Mobile Store, etc. Even this offline distribution was a challenge that kept many brands out of the country, but when Motorola chose to partner with Flipkart to sell its phones exclusively online, it showed a route to market that other brands could also follow.
Motorola took a bold step and skipped offline distribution altogether striking an exclusive online partnership with Flipkart. The bet paid off handsomely with Moto G being a super hit in India, followed by Moto E. Motorola’s success with Moto G, E, and X, made other manufacturers look toward an online only model. Without spending time and resources on setting up a complex offline distribution model, manufacturers could all of a sudden reach a large number of Indians.
The logistics of delivering the smartphones was handled by the e-commerce marketplace. Many e-commerce marketplaces were also willing to provide marketing support and other perks in return of exclusivity. In these ways, the e-commerce companies would create an easy launch platform for Chinese manufacturers to enter India, with brands like Xiaomi and OnePlus leading the way.
In 2015, online smartphone sales accounted for about 37.3 percent of total smartphone sales in India, according to IDC. If anything, the convenience of online shopping and the exclusives along with full front page ads are going to increase the share of online sales of total smartphone sales in India.