Chinese smartphone makers put investments on hold in India amidst geopolitical clash

With the ongoing geopolitical tensions, Chinese smartphone makers are putting their immediate manufacturing-related investments on hold, given the uncertain business environment. Officials from Chinese smartphone makers and the industry say the banning of 59 Chinese apps have made them even more nervous, with some wondering if they will be the next target in India, and are watching the situation cautiously.

Major Smartphone investors such as Oppo and Vivo in fact are yet to register for India’s ambitious production-linked incentive (PLI) scheme for manufacturing, even though the likes of Apple phone makers Foxconn and Wistron, besides local manufacturers such as Dixon, Lava and Karbonn have done so.

Vivo was planning to invest Rs 7,500 crore, among the largest investments into local manufacturing by any smartphone maker. Oppo is also helping set up an Electronic Manufacturing Cluster (EMC) in Greater Noida along with six other companies to make electronics and support accessories with a total investment of Rs 3,500 crore. Foxconn has also announced higher investments in India.

“From a short-term perspective, their investments are on hold since market recovery will take time,” said Tarun Pathak, associate director at Counterpoint Research. “There is uncertainty seeing anti-China sentiment. While there is pent-up demand, there is a market slowdown.”

Chinese players including Xiaomi, Oppo, Vivo, RealMe and OnePlus have cornered around 80% of the entire Indian smartphone market, though that may fall going forward owing to the current supply and geopolitical crisis, say experts. Amidst growing anti-China sentiment in the country, traders’ body Confederation of All India Traders (CAIT) has written to finance minister Nirmala Sithraman, IT and telecom minister Ravi Shankar Prasad and commerce minister Piyush Goyal to investigate Chinese handset companies that make smartphones locally, especially from the data security and privacy point of view.