India is key target for top Chinese vendors: analysts
China's Xiaomi Inc is setting out to snap up a share of new emerging smartphone markets abroad, as it is struggling with a domestic sales drop.
The Beijing-based company revealed its ambitions this week. On Wednesday, it further enticed smartphone lovers in the Middle East and North Africa with the release of its three latest smartphone models - Mi MIX, Redmi Note 4 and Redmi 4A - at an event in Dubai.
The launch event came soon after Xiaomi announced its official entry into Pakistan on Monday through a partnership with Smart Link Technologies for distribution and after-sales services.
Pakistan, the world's sixth most-populated country, has become one of the fastest-growing smartphone markets since the introduction of third- and fourth-generation network standards in 2014.
Under the partnership, shopping site daraz.pk will help sell Xiaomi products online in Pakistan, according to a joint press release obtained by the Global Times Wednesday.
Daraz.pk also runs e-commerce operations in Bangladesh, Myanmar and Sri Lanka, which experts said can help Xiaomi's future expansion in those countries.
Xiaomi, known for low-budget smartphones, rolled out its globalization strategy in 2014. India was among the first patch of overseas markets it entered. After two years of operations, Xiaomi racked up more than $1 billion in the country last year with smartphone shipments growing by almost 150 percent year-on-year,
"It [Xiaomi] had been focusing on India since failing to meet sales targets in 2015 and suffering a sales contraction in the domestic market that it once led," Wang Yanhui, head of the Shanghai-based Mobile China Alliance, told the Global Times Wednesday.
Data from International Data Corp (IDC) showed that Xiaomi dropped to No.5 with 41.5 million smartphones shipped in China last year, down 36 percent year-on-year. China's lesser-known Oppo led the market for the first time, closely followed by Huawei, Vivo and US phone maker Apple Inc.
Xiaomi's low-budget phones can gain a niche in Pakistan where users are not wealthy and are sensitive to price, but the company won't be able to extend its success in India into Pakistan in the short run due to the underdeveloped telecoms network, said Li Yi, a senior research fellow at the Internet Research Center under the Shanghai Academy of Social Sciences.
Xiaomi is not the only one eyeing overseas markets. Shenzhen-based Oppo has operations in 28 countries and regions outside China, including Southeast Asia, South Asia, Australia and Africa, a public relations representative with Oppo told the Global Times Wednesday.
Among the top three Chinese vendors in the domestic market, IDC said that Huawei is "the most successful" one in terms of international expansion.
It said in a report on February 5 that half of Huawei's phone shipments came from markets beyond China in last quarter of 2016.
"Chinese handset brands need to seek new growth engines in new emerging markets like Southeast Asia, India and Brazil to offset the headwinds they are facing in China, the world's largest smartphone market, which is getting increasingly concentrated and saturated," Li told the Global Times Wednesday.
Both Li and Wang said that India will remain a key target for Chinese phone vendors this year.
India's current development level is like that of China 10 years ago, suggesting a massive potential that Chinese companies won't want to miss, said Li.
According to Counterpoint Research, Chinese brands like Xiaomi and Oppo accounted for more than half of the smartphone shipments in India in November.
Oppo's PR representative said that Oppo mainly focuses on fulfilling the needs of young consumers from Southeast Asia and India. The company plans to invest 1.5 billion yuan ($218 million) on an industrial park in India over the next two to three years, she said, noting that the initial output of the park will be 50 million units.
"It is not easy to go global, especially doing businesses in the new emerging markets, where companies will face simmering protectionist sentiment and unclear taxation rules," Li cautioned.
