Business environment deteriorates for Chinese brands in India, as Boycott China stays in play

Chinese Brands in India are facing hard times. After the Galwan Valley clash along the Line of Actual Control (LAC) in June, business is not the usual. There have been calls to boycott China and Chinese goods and halt all imports from mainland China. And the government has also banned scores of Apps.

Industry sources told Reuters that Chinese firms like Xiaomi, manufacturer of Mi and Redmi smartphones, are facing delays getting approvals from India’s quality control agency for their goods. The report points out that the Bureau of Indian Standards (BIS) has in recent weeks delayed approvals for mobile phone components and televisions, jeopardising the plans of firms such as Xiaomi and Oppo.

Geopolitical analysts have said that the most severe border tension in decades between the Asian giants has hurt the economic ties and its expected to worsen more. New Delhi has also taken up aggressive stands such as hardening its foreign direct investment (FDI) laws.

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An official said India-China relationship has gone south dramatically and added that New Delhi was unlikely to approve several investment proposals immediately. “We cannot do business as usual,” he said. Reuters quoted a senior Indian official saying that the government was working on a new standards policy, which is likely to be announced later this month (August), in a bid to target low-quality products from China and elsewhere. A source highlighted those deliberations had stalled approvals for even branded Chinese companies. “The products are not getting clearance as quality standards are being upgraded because of which many product lines could be affected.” Under the BIS’s registration scheme, certain electronic goods, whether imported or locally made, need to meet India’s standards. After companies get their products tested in a certified laboratory, BIS approves the applications.

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Analysis highlights that Chinese smartphone brands, including Oppo and Xiaomi, account for 8 of every 10 smartphones sold in India. These two companies assemble most of their smartphone models in India, while several components are imported from China. According to a report ‘India’s Smartphone Supply Chain 2020 – Chinese Smartphone Brands Aggressively Tapping Into India to Create New Business Opportunities’

Chinese smartphone brands have established a solid foothold in India and continued to expand rapidly, and their suppliers are likely to build up a local supply chain ecosystem in India. It said that in the wake of changes in the global market, the impact of the COVID-19 outbreak, and cost considerations, India will become another potential hub for smartphone brands.