Chinese products battle boycott sentiment; app makers could lose $70-$100 million annually

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Published: July 6, 2020 7:01 AM

In the meantime, cautious brands are recalibrating their digital media spends for the short term. Mondelez India, which has leveraged TikTok in the past, will be “focussing its digital media spend on Google and Facebook.

TikTok, in a statement, said it complies with “all data privacy and security requirements under Indian law” and has “not shared any information of users in India with any foreign government.
Rising tensions and clashes at the India-China border have resulted in the emergence of a strong anti-China sentiment in India directed at Chinese brands. The situation has been exacerbated with the central government imposing an interim ban on 59 apps belonging to Chinese companies. The list of apps, banned on June 29, included TikTok, Shein, Club Factory and UC Browser, and according to Counterpoint, Chinese app makers could lose $70-$100 million annually.
Before the ban, the Indian Premier League’s governing council has decided to review IPL’s sponsorship deals. In 2018, Chinese company BBK Electronics-owned Vivo bagged the five-year sponsorship rights for the IPL at `2,200 crore. However, reports suggest it is highly unlikely that BCCI would drop Vivo as a sponsor.
When the sentiment against Chinese businesses started  turning negative, Xiaomi covered the name boards/signages of its retail partners with ‘Made in India’ logos.  It added a ‘Made in India’ section on its website to list its contributions to local communities, employment generated in India, highlighted its manufacturing abilities, and noted that the entire leadership team comprises Indians.
Even though Chinese smartphone brands have not been banned, strict anti-China regulations could result in other kinds of trouble. “Their imports are being checked at various ports of entry. This could impact their supply chains,” said Prachir Singh, senior research analyst, Counterpoint Research.
As per a survey by Counterpoint, four out of 10 Indians do not want to buy a Chinese handset. However, Chinese brands, including Oppo, Vivo, OnePlus, Realme, Xiaomi and Huawei, account for 81% of the smartphone market. Indian brands own less than 1% of the market. “Samsung is the only non-Chinese brand that may stand to gain, but this depends on how the brand responds to the anti-China mood in India,” Singh added.
Largely, Chinese brands have not made overt efforts to reassure consumers other than activating their public relations machinery. “It is disappointing that these companies have not been communicating with their consumers. They have been caught on the backfoot as they have not been proactive in their communication strategy,” observes Harish Bijoor, brand strategy specialist, Harish Bijoor Consults. “When perception is everything, brands must invest in mass communication initiatives.”
TikTok, in a statement, said it complies with “all data privacy and security requirements under Indian law” and has “not shared any information of users in India with any foreign government, including the Chinese government”. Club Factory, too, issued a statement that the app has not compromised the security and privacy of users.
Even if the ban may not continue for a long time, apps that have now been identified as “Chinese” may stand to lose their brand equity among some users. “The companies are stuck in a Catch-22 situation where anything they do or say could be criticised,” Saurabh Uboweja, managing partner, BOD Consulting, said. He added that these brands could demonstrate through their mass media communication that they follow all the norms as per Indian law and do not pose a threat to India’s security and sovereignty.
In the meantime, cautious brands are recalibrating their digital media spends for the short term. Mondelez India, which has leveraged TikTok in the past, will be “focussing its digital media spend on Google and Facebook and experiment with video streaming platforms for the launch of its latest product Cadbury Chocobakes”, Sudhanshu Nagpal, associate director – marketing (biscuits), Mondelez India, said. The company allocates around 40% of its marketing spend for its biscuit category to digital. “So far because of brand safety concerns TikTok does not heavily feature in our digital marketing media mix,” Nagpal added.
Apps like TikTok, UC Browser and ShareIT have been especially popular in non-urban markets. And apps like UC Browser, in fact, come preloaded on low-end smartphones, thereby becoming the default browser for many users. “Advertisers looking to target markets in small towns and cities will need to rethink their marketing strategies. We expect a shift towards Indian apps including Jio Platforms for advertising and video streaming,” Shamsuddin Jasani, group MD, Isobar South Asia, said.

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