"Transit": Chinese Mobile Phone Manufacturers Under The Scorching Sun Of India

Zhang Yang has been waiting for this loose news for too long. In mid May, with the successive lifting of the blockade of several major markets in the world and the joint efforts of many enterprises, the Chinese mobile phone industry chain in India was finally approved and resumed.

"For factories, the longer idle time is not only cost pressure, but also the time needed for the factory to restart itself." Zhang Yang is the head of a precision structural parts manufacturer. He is under great pressure to go back to work.

So after the official caliber was relaxed, Zhang began to return engineers to factory inspection equipment in May 7th, and found that there had been a high failure rate. "For a long time no boot, during the blockade workshop did not open the air conditioning and other processing systems, office for a long time in high temperature, precision equipment is unable to carry such a high temperature in India." Zhang Yang regrets that fortunately, the factory has built relatively perfect testing environment, which can be relatively quickly detected and adjusted. Otherwise, it will be very painful, but even so, the adjustment of the fault will take time.

At present, many factories in the area have reached the 1/3 recovery rate, which is in line with the local requirements of India. And in May 4th, when India lifted restrictions on the category of electronic commerce sales, electronic products also began to welcome the first round of recovery consumption.

Realme India marketing director Wang Shuo intuitively felt this enthusiasm. Because the impact of the epidemic has not yet ended, the company did not promote advertising sales restart. "But on the first day after the lifting of the ban, at 0 o'clock in May 4th, our official website and e-commerce platform opened for sale, and there are tens of thousands of orders within one hour.

India can be said to be a microcosm of this round of lifting part of the blockade of the state. The "brand highland" many Western European countries have also gradually lifted the offline blockade recently. However, people in the industry generally believe that the upgrading of consumer demand still takes time. Even if there is a resumption of consumption in the short term, it is difficult to evolve into a "retaliatory consumption" demand, which has been reflected in China.

More than half of the second quarter of this year, when the new crown is at its most dangerous time, it seems to be in the past, but I am afraid it will not be easy for the rest of the next few days.

Under the pressure of economic recovery, cash is king era. Both emerging and super large economies are facing new industrial trends. In terms of consumption, people tend to buy products more cheaply and conservatively.

This is a test of the rapid adjustment of mobile phone industry chain manufacturers to meet the needs at the beginning of the year. In the 5G replacement cycle, inventory risk must be strictly controlled, and moat must be firmly secured.

As a high growth market, India has obvious characteristics of emerging economies, which are extremely sensitive to prices. Vision China

Reemployment is imminent.

Since India announced the closure of the country, local Chinese enterprises have been negotiating with the government, hoping to bring the experience of epidemic prevention in the Chinese market to the ground and promote partial resumption and resumption of production as soon as possible.

This is because during the period of the blockade, even if consumption was frozen, there was a lot of hard spending on the factory. According to local requirements, during the period of blockade, employees can not be expelled and wages must be paid normally, not to mention passive depreciation of large equipment.

"The temperature will be great." Zhang Yang counted carefully that the circuit board needed to rely on soldering connections, but it was easy to melt when exposed to high temperature, and India just happened to be mostly in the tropics. Besides, the dust in the dark area would also affect the restart efficiency for a long time.

Fortunately, despite the pressure of anti epidemic in the area, it is not the official "red" area, which can be resumed. "We take the shift system, and the production is not large at present. The return to work can meet the basic production needs." He said.

Compared to Zhang Yang's anxieties, Li Wei, a channel merchant, has been busy with his latest work rhythm. Call the India team during the day and call the American team in the evening. "The decision making in India market should be handled basically, so it belongs to stocking up state, and my main energy will be placed in the European and American markets."

20 days ago, Li Wei formally launched a platform similar to the US regiment in India, which is an appropriate supplement to the icy offline channels, mainly based on errands. The downloads have reached 700 thousand these days, and only the Android version has been launched.

"Before the opening of the electricity supplier channel, there are still many controls in India. Some people in closed communities can't go out. They can only buy people's help through similar platforms, and they can only buy daily necessities." Li Wei has maintained close communication with Amazon platform. Probably at the beginning of this week, Amazon platform finally got permission to open all category buying, and India's electricity supplier channels were fully activated.

But it is not easy to push the upper stream mode in India market for a long time.

In China, when the epidemic pressure is greatest, private sector traffic prevails, and many electronic products salesmen are successful. However, India's infrastructure can not support similar promotion mode, which is also a headache for mobile phone manufacturers.

During the period of India sealing up the country, the wages of the promoters were always released by the major manufacturers, but it was very difficult for them to rush out of the world.

"The measures we take are to support them in the live broadcast of Facebook products, mainly to introduce products." In an exclusive interview, Wang Shuo admitted to the twenty-first Century economic report reporter that after trying, it was found that the O2O mode had some effect in India, but the effect was not obvious because of the network accessibility.

Even though the India version of the jitter is once popular, the complete live broadcast is not yet mature. Therefore, the company simply defines it as a kind of marketing behavior and takes promotion as the main purpose.

Exploratory post resuscitation

After the relaxation of the India blockade measures, Li Wei obviously felt a burst of consumer demand for electronic products, but not the whole machine sales, but peripheral accessories.

"According to the backstage data, we find that headphones and data lines are very strong in consumption, and they are especially popular in the last three or four days. But sales of rechargeable treasure are not very good. He analyzed that this may be related to the usage habits of locals. India is a rapidly consuming market for parts and components, while the long term home blockade has greatly reduced the demand for mobile charging.

Objectively speaking, India electric providers mostly use the mode of cash on delivery. Therefore, this kind of hot selling is more manifested in sales volume, and the specific signing rate still needs time to observe.

Wang Shuo felt more clearly. Even during the period of realme, the new backstage phones can be seen activated. "This means that there are still some transactions, which may be under some less stringent control lines or remote four or five line cities."

After the gradual relaxation of the blockade, sales have recovered relatively rapidly. In recent days, it has reached 1/2 of normal daily sales volume.

Orders are mainly stuck in the logistics stage. "We are faced with the problem of insufficient use of logistics warehouses, for example, in some red areas, under the control of the line is still very strict." According to Wang Shuo, realme now has about 20% of the after-sale centers reopened.

But in the short term, he was very conscious of market enthusiasm. "India has been closed for a long time, so when the market starts, there will be a sudden change in demand, but it may also be faced with bottlenecks later."

France, which declared the lifting of its blockade in May 11th, is still in the doldrums. "Despite the introduction of a stimulus spending policy, the Western European mobile phone shipments dropped by 19% in the first quarter of this year, which has been on the decline for many years from 2018 to the present, indicating a saturation of the whole market." Canalys analyst Jia Mo told reporters that the sharp fall at the beginning of this year is almost contrary to the market discipline.

He further analyzed that the market usually does not have such a big drop after hitting the bottom, which fully shows that the Western European market is affected by the epidemic.

Even though Europe has a mature electricity supplier system different from India, the demand for consumption is not strong due to the high cost of logistics distribution (around 4-10 euros).

During the epidemic, many retailers and operators of electronic products proposed small postage free activities to stimulate the market, but the recovery of consumption still takes time. "According to my understanding on the spot, after the lifting of the blockade, there was no increase in the number of passenger outlets under the offline retail channel in France, but on the contrary, it was reduced." Jia Mo pointed out.

After the relaxation of the blockade in major markets, even when factories begin to partially reopen, they still face difficulties, mainly in the field of epidemic prevention. According to the twenty-first Century economic report, the majority of Chinese employees in the Chinese funded factories have returned home in bulk after the Spring Festival. With the spread of the epidemic, they are still unable to return to India.

Zhang Yang had such worries. "No one sends people to worry about the poor management of the local people in India. But in the epidemic situation, they worry about sending people in the past with security risks, which is more contradictory."

The electricity supplier channel can be more standardized. Although people in China, Li Wei has improved the internal system through iterative systematic operation.

"On these two days, we launched a new system to operate the Amazon platform. Compared with the past, the demand for personnel in the new system will be reduced to the original 1/5, and at the same time, the demand for personnel quality will be higher and the complexity of work will also be reduced. He said that the new system has replaced many jobs that need to be done before.

Realme's team is relatively special. In January, when the domestic epidemic began to show signs, some of the employees who had already returned home were stationed in India for a long time, so the local factories could guarantee better protection experience.

Wang Shuo, who has been printing for several months, told reporters that "at present, the rate of staff recovery is around 25%, because many of the employees across the region have not returned to work. We have imported masks and other equipment from China to produce masks, and will also allow workers to distance themselves from work and arrange nucleic acid testing for all employees.

He continued to say that at present, India's market demand is strong, but the next step is to wait for the landing of the fourth version of the May 17th India closure measures. "A lot of main machines are out of stock. We want to get back to work faster, but hiring is not very convenient now. I hope that the next step can be quicker, and can reach 100% at the end of this month.

The trend of consumption tends to be cautious.

Despite the emergence of restorative consumption, the market is already quite different from before the epidemic.

"We find that the demand for mobile phone products in the India market below RMB 1500 yuan is obvious, but the sales volume of machines over 2000 yuan has not recovered much." Wang Shuo told the twenty-first Century business news reporter that there is another discovery through data statistics that consumption may have been downgraded.

"According to the data, some users may be more expensive than a new mobile phone, for example, the mobile phone with a price of 1500 yuan, and now it has become a mobile phone that uses 1000 yuan." Wang Shuo analysis, this may be related to India's domestic epidemic has not been controlled. Not seeing the endemic epidemic and isolation can make consumers' mindset more cautious. Even if there is a demand for replacement, they dare not spend too much money.

Jia Mo has similar analysis. He pointed out that Western European countries require that during the period of epidemic blockade, wages should be paid as usual in accordance with the standard of over 80%, which is to accumulate wealth for those close to home. But once the blockade is over and the government subsidies cease, consumer demand is hard to fill.

"People will worry that there will be a wave of layoffs after the outbreak, and the consumption tendency will be more conservative. Therefore, I do not think there will be strong retaliatory consumption, but there will be recovery consumption. " He further said.

According to Canalys statistics, in the first quarter of 2020, the world is indeed emphasizing the performance price ratio of manufacturers, the growth of products is more obvious, which reflects the attitude of consumers to a certain extent. Jia Mo told reporters that, for example, the red rice of millet continued to grow in the context of the overall collapse of the Western European market. During that time, the share of the channel that had been lost for objective reasons was captured.

He further pointed out that in the global market, the incremental sources of vivo in Q1 are mainly in cost-effective models. For example, the Y series has achieved more desirable performance.

Vivo's cost-effective brand iQOO (AI cool) is strong in China. According to Canalys, AI cool accounted for 17% of the total vivo shipments in the first quarter of the year, but only 6% last year.

This means that mobile phone manufacturers' strategies need to be adjusted quickly. Wang Shuo said frankly that before the India sealed up the country, realme originally planned to launch some products on the basis of the beginning of this year, but at the moment, the idea should be changed.

"We are considering adjusting the medium and low end product lines." He disclosed that the direction is about short-term strategic abandonment of higher priced products, but the direction of sinking.

Another reason is that the local tax rate has increased further, and the market is generally facing price pressure. In March, the India government proposed to raise the GST rate (similar to the consumption tax) of smart phones from 12% to 18%, and it will be implemented in April 1st.

As a high growth market, India has obvious characteristics of emerging economies, which are extremely sensitive to prices. This undifferentiated promotion tax policy will have an impact on the local mobile phone market ecosystem.

"The rise in the GST tax rate and the continued fall in the rupee against the US dollar have led to a rise in the price of mobile phones." Wang Shuo reluctantly said that from April 1st to now, the price of mobile phones has been raised by at least 50-100 yuan.

It seems that the amount is not large, but to the 1000 yuan mobile phone, this is higher than the 1/10's influence on the purchase factor, I'm afraid it will bring a sales impact to the lower price segment of the mobile phone product or brand.

According to Wang Shuo, this year was originally the period when realme plan continued to expand the offline channels. The epidemic delayed the plan, and of course, it was also faced with some possible future uncertainties.

"The epidemic has stopped the expansion of our channels, and will continue to implement the offline strategy according to the circumstances, according to the degree of recovery after the outbreak. At the moment, we will continue to push forward overall optimism, but if there is an extreme situation, the strategy will be adjusted accordingly. He said.

More than that, 2020 was originally a year for more mobile phone manufacturers to expand globally. At the beginning of the year, OPPO high level media interviewed pointed out that it would continue to expand the Latin American market; vivo originally planned to play a great role in MWC.

Li Wei is also facing this difficult problem. He plans to further expand the Middle East market this year, but at the moment it is definitely going to be delayed.

"We have decided on the Middle East market and we need to expand it further. But at present, only the local people who are fully aware of the Middle East market will be able to consider expanding the development plan as soon as possible after they are in place. He pointed out.

Supply ecology closely linked

Under the epidemic situation, every move of mobile phone supply chain system is related to each other and involves the integration of the whole ecosystem.

For young brand realme, it is a key issue to strictly control inventory risk and keep pace with market demand. Wang Shuo told reporters that realme's production and marketing strategy in India is very flexible, and is known as the "2+1 mode".

"For example, in the 2 month cycle, determine the amount of stock for the next 2-3 months in the first month, and then adjust flexibly according to the sales performance of the first 2 months." He pointed out that this can make realme's inventory cycle and purchase orders strictly controlled. "Emphasizing inventory risk management, and resolutely avoiding more products. If we see a model in the market, we may decide to cut the bill immediately, and we must not be able to make more products and then have to sell at a lower price".

In order to ensure that this strategy is effectively implemented, realme has formed close cooperation with India's largest local e-commerce platform Flipkart, based on the platform's insight into the market and discussing the next product planning. This is also regarded as a moat of realme.

The reverse case comes from the European market. One industry insider told the twenty-first Century business news reporter that during the epidemic period, some European carriers were even willing to "handle" some mobile phones in order to reduce the unnecessary funds from inventory.

"At present, the results have been achieved. Recently, operators have begun to get in touch with the active Chinese manufacturers in Europe, and the trend of opening new orders has begun. He pointed out that in general, the new models of European countries could be delayed for 1-2 months.

The celebrity continues to say that in the operator dominated market, the cooperation orders between the whole machine manufacturer and the operator will start to discuss and draft the contract 6-8 months ahead of time. Therefore, the "sell off" behavior of the early operators is a hedge action. The epidemic will only delay the previous cooperation, and will eventually be launched according to the plan.

Based on the comprehensive performance of the domestic market, there has been a lot of noise in the market since the beginning of this year.

Counterpoint analyst Tang Ding analyzed to the twenty-first Century economic report reporter that although the domestic market epidemic was serious in the first quarter of this year, the overseas market with larger volume has not been affected obviously, so the whole machine's behavior of cutting the supply chain is not obvious. For brands with a large share of overseas market, they will continue to add orders because they are worried that the epidemic will affect subsequent production.

The change is in the second quarter. In order to cope with the spread of the epidemic, the whole plant's supply chain chop will be more obvious. "Because of the spread of overseas epidemic, manufacturers will consider the market forecast, so it is normal to appear on some parts and pieces." Tang pointed out that this will be more manifested in the traditional parts and components, that is, whether 4G or 5G phones need parts, manufacturers are more likely to face such problems.

As a key business year for 5G, the core suppliers of 5G will not encounter this situation. She added that, especially in the field of 5G RF front-end and several key components of the 5G chip, the order is actually increasing year by year, and certainly does not exclude the expected reduction compared with the beginning of the year.

However, the supply chain news shows that the manufacturers headed by HUAWEI are continuing to add orders to the supply chain. There may be some lag in other major markets around the world.

Wang Shuo told reporters that it is expected that the mobile phone shipment of India market will show U structure this year. "From the end of March to the first half of May, the overall sales volume will be relatively low. But optimism is likely to begin to recover in 7-9 months, especially during the period of India. There will be a large-scale shopping festival. If the product layout is well done in the second half of this year, though it will not increase significantly this year, it will still be able to achieve at least less than last year.

Jia Moye believes that in the second quarter of this year, because of the emergence of restorative consumption, it will not be too depressed, and there is still half a quarter of recovery time. In the third quarter, because of the lower price of 5G mobile phones, the global stability situation will appear. (Li Wei and Zhang Yang are pseudonyms)

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