Chinese mobile phone suppliers eye Indian market

Amar Babu (right), chairman of Lenovo India, stands together with a model at the launching ceremony of Lenovo Vibe X smartphone in New Delhi.[Photo/Agencies]

For Chinese cell phone parts suppliers, Indian market has much more temptations than the overcapacity-hauling domestic market, 21st Century Economic Report said on Wednesday.

According to an annual budget report released by Indian government in February, the import custom duty for cell phone parts such as chargers, adaptors, batteries, headphones and speakers rose from zero to 29.44 percent, the production import duty for mobile phone's printed circuit board (PCB) grew to 2 percent from zero. Consumption tax rate for locally-purchased cell phone parts such as chargers and batteries also rose from zero to two percent, started from March 1.

Apparently, such policy shows Indian government's hope to produce mobile phone parts locally. With the change of import duty, several battery suppliers confirmed to the newspaper that they will soon go to India to inspect the prospect of opening factories so to expand the market.

An unnamed battery supplier said that the change of import duty is a big lure for Chinese companies' localization as well as trade. "First come first serve, the earlier you get into the market, the less competition you have."

According to statistics from industry research institute, almost a hundred companies on the mobile supply chain have built factories in India and are busy in mergers and acquisitions. The migration of the supply chain is an inexorable trend.

To boost its manufacturing industry, Indian government has been adjusting the trade policy. Huang Hanzhou, general manager of a mobile supply chain management firm in Shenzhen, said the Indian government has a five-year-plan for its mobile phone industry and is attracting suppliers of parts who are less technology-driven. When the market gets more mature, the policies will attract more high-tech industries over.

"If suppliers have factories in Indian, the import duty is only one percent. It makes a big difference."

According to statistics from a research institute under TrendForce, the shipment of smartphone reached 71 million units. For small- and medium-sized Chinese suppliers, diving into India's potential market gives them an opportunity to leave the domestic industry and its risks, the newspaper said.

A supplier told the newspaper that there's still risk building factories in India. The lack of mature industrial cluster and the cost of developing locally should be taken under consideration, he said.

"Indian market is the last chance for Chinese mobile chain suppliers. If the market gets excessive, the industry will only be in the hands of several industry giants."