Covid-19 lockdown effect: Low-end Chinese smartphones disappear from shelves

By: |
June 10, 2020 2:27 AM

Result is that with the easing of the lockdown and opening of stores in the last few weeks, there's a shortage of Chinese brands like Xiaomi, Realme, and Vivo, etc in the sub-Rs 15,000 category.

Chinese smartphones,coronavirus pandemic , Xiaomi, Realme, vivo, indian consumers, smartphone,AIMRA,pre-CovidPhones in the sub-Rs 15,000 category are very popular with consumers and their replacement cycle is often less than two years.

The Chinese root of the coronavirus pandemic has disrupted Indian consumers’ plans to buy new smartphones. Reason being that the supply chains of the Chinese manufacturers like Xiaomi, Realme, Vivo, etc got impacted with China being down with the virus since January. Second, the subsequent lockdown in India led to closure of the assembly plants of phone makers in the country, which further affected production.

Result is that with the easing of the lockdown and opening of stores in the last few weeks, there’s a shortage of Chinese brands like Xiaomi, Realme, and Vivo, etc in the sub-Rs 15,000 category. Sales of the sub-Rs 15,000 category comprises more than 70% of the around 11 million sales of smartphones in a month, industry executives said.

The share of these three brands in the smartphone market is over 60%. Phones in the sub-Rs 15,000 category are very popular with consumers and their replacement cycle is often less than two years.

With the easing of the lockdown and opening of stores, the stock which was lying with the company and retailers sold like hot cakes and got over very soon, traders said. With components supply from China and assembly in India still not in full swing, retailers said that there’s not enough supply of these price category phones and buyers are returning disappointed.

“Xiaomi and Realme are the worst affected brands as they primarily cater to this price segment,” Arvinder Khurrana, president of All Indian Mobile Retailer Association (AIMRA) told Financial Express. The association represents around 1.5 lakh phone retail outlets across the country.

He said due to the current situation South Korean manufacturer Samsung, which has a plant in Noida also but is not a dominant player in sub-Rs 15,000 category, is benefiting. The company has launched its M series phones, earlier sold only through online mode, for offline stores also. Most of the M series devices cost around Rs 15,000.

“As most of the factories are working at about 30-33% capacity, so supply issues are going to be there,” Khurrana said.

“It may take another 3-4 months for the production to reach pre-Covid levels if the pandemic remains in control and there is no further lockdown,” Tarun Pathak, associate director, Counterpoint Research, which tracks phone shipments, said.

“Xiaomi has always believed in real time inventory and the lockdown impacted this, resulting in lower stock in few markets over the first few weeks post lockdown relaxation, especially as compared to the exponential demand the brand witnesses,” the company said in a statement to FE. It said that it has witnessed good demand for products both offline and online throughout the lockdown. “During the lockdown, over a few weekends we sold in about 50% of our offline stores in Kerala and saw 2X of the usual demand, which was validation of mobile phones being an essential commodity during such conditions. However, due to government restrictions most of the functions were at halt in the initial weeks,” the company added.

On its part, Vivo said that it has started production at its plant in Greater Noida at about 30% of the capacity.

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