Chinese smartphone giants suspend manufacturing in India amid coronavirus lockdown

Yujie Xue

China’s major Android smartphone vendors, including Xiaomi Corp, Oppo and Vivo, have suspended manufacturing operations in India amid a nationwide lockdown to stop the coronavirus from spreading.

The 21-day lockdown, which started from midnight on Tuesday after Prime Minister Narendra Modi’s announcement, is expected to result in a decline this year in India’s smartphone market, the world’s second largest after China, as manufacturers comply with the order and domestic consumption slows down during that period, according to analysts.

Apple’s main iPhone assemblers, Foxconn Technology Group and Wistron Corp, as well as South Korea’s Samsung Electronics and LG Electronics have also temporarily shut down their plants in India in line with the government’s directive.

“In the worst-case scenario, the Indian smartphone market could see a 4.2 per cent decline in 2020,” said Nicole Peng, vice-president of mobility advisory services at Canalys.

The projected slowdown in India, where Canalys estimated smartphone shipments to have grown 8 per cent to 148 million units last year, may be a bigger concern for China’s major Android smartphone companies, which are the market’s most popular brands. These companies have already been adversely affected by the sluggish economic growth and weak consumer spending in their home market, owing to China’s protracted trade war with the US and exacerbated by the Covid-19 outbreak.

Coronavirus: Modi puts all of India under total lockdown for 21 days to fight coronavirus

Global smartphone shipments tumbled 38 per cent to 61.8 million units in February because of the public health crisis, as factories in China were shut down and consumer demand plunged because of the government’s tight travel and transport restrictions, according to data from research firm Strategy Analytics. Smartphone factories in China have slowly restarted operations this month, as the coronavirus crisis eased up.

A spokeswoman for telecommunications equipment giant Huawei Technologies, the world’s No 2 smartphone vendor, declined to comment about its supplier situation in India. Huawei was among the first Chinese smartphone brands to have its devices assembled in the country, with electronics contract manufacturing partner Flex.

Xiaomi global vice-president Manu Kumar Jain, who also serves as managing director at Xiaomi India, confirmed in an open letter that its production facilities in the country have been shut down, following the government’s lockdown order. The company said these operations, as well as its corporate offices, service centre and Mi Home shops, will remain closed until further notice from the government.

The Hong Kong-listed company employs more than 1,000 staff across its headquarters in Bangalore and around five regional offices in India, a spokeswoman said. Foxconn, formally known as Hon Hai Precision Industry, also makes certain Xiaomi smartphone models in India.

A statement from Oppo India said operations at its factory in Greater Noida, a city in the Gautam Buddh Nagar district of the northern Indian state of Uttar Pradesh, have been suspended and that all its employees were working from home.

Vivo India, which started work-from-home arrangements for its employees since March 23, confirmed the suspension of manufacturing at its plant in Greater Noida until April 15, according to an emailed statement from a company spokesman.

Canalys’ Peng indicated that a temporary halt in manufacturing in India may have been expected by China’s major smartphone companies ahead of the government’s announcement. “Given their previous experience in China, these smartphone makers should have been more prepared,” she said.

Xiaomi has established itself as the most popular smartphone brand in India since 2018. It had a 28 per cent market share last year, followed by Samsung, Vivo, realme and Oppo, according to data from Counterpoint Research.

Peng said the “best-case scenario [for India’s smartphone demand] is a 3.2 per cent year-on-year growth” after manufacturing resets from the lockdown and consumption is revived in about a month.

As of March 24, India had a total of 519 confirmed cases of Covid-19, including nine fatalities and 40 patients who have been discharged, according to the World Health Organisation.

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