Government scrutiny, macroeconomic factors impact Chinese smartphone companies’ 2023 plans in India –

Chinese smartphone players dominate the Indian market with around 80 percent market share. The likes of Xiaomi, OPPO, Realme and Vivo share a significant share of the Indian smartphone market due to their range of value-for-money offerings at different price points. Despite the small slowdown in the second half of 2022, the brands continue to witness stable sales in India. By 2023, companies were expected to do all they could to attract more buyers and make up for the drop in sales that occurred due to chip shortages and logistics issues during the pandemic. However, it seems that things seem to be a bit bleak for these Chinese smartphone companies in India.

According to a report, Chinese brands are already cutting costs. The companies, despite being market leaders in India, are facing macroeconomic difficulties along with scrutiny from the Indian government over allegations of money laundering and tax fraud.

Chinese smartphone companies suspend their plans for 2023

Chinese smartphone companies are already cutting their workforce following recession fears looming globally. To reduce operating expenses, companies are likely to reduce marketing expenses next year. An Economic Times (ET) report, citing IDC India Associate Vice President Navkendar Singh, said that Chinese companies are feeling the pressure of an economic slowdown, declining demand and government scrutiny in India.

“Right now, there are a lot of uncertainties in (Chinese) companies. No one is committing to what kind of marketing and distribution investment will be made next year,” Singh said. Companies usually start planning for the following year in October itself. However, this time, there are no firm plans in place. Singh added that brands cannot afford to scale back operations after a slow 2022. If the pressure on brands persists, their profitability will suffer. “The immediate impact may be a lot of uncertainties, some layoffs and a voluntary exodus of employees from Chinese brands,” Singh added.

The likes of Xiaomi, OPPO and Vivo are already facing scrutiny from the Indian government for currency and tax payment irregularities. Macroeconomic factors have also added to the hit on sales. Because of this, IDC India predicted an 8% to 9% decline in shipments in 2022 following a quiet fourth quarter.

Sanjay Shetty of Randstad India said Chinese companies have already laid off between 600 and 800 employees amid volatile economic conditions. “There has already been a 30% reduction in the workforce over the last year and a half and this is expected to accelerate in 2023 amid fears of volatile economic conditions, an industry executive said.

None of the major Chinese smartphone companies have officially confirmed any detailed information about their 2023 plans or even layoffs.

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