India’s second-largest smartphone vendor, Micromax Informatics, announced on Thursday that it plans to enter the Chinese market next year. The company started selling its smartphones in Russia back in January 2014, and is already reportedly the third-largest vendor there with a market-share of around 9%. The company also sells its smartphones in Nepal, and multiple rumors over the past several months have actually indicated that the company is interested in trying its luck in the highly-lucrative U.S. market, although, nothing concrete has come of it thus far. Now that Micromax is looking to fight it out in what is arguably the single-most competitive smartphone market in the world, it looks as though the company has its job well and truly cut out.
Once in China, Micromax will not only have to compete against some of the largest multinationals like Huawei, Lenovo and Xiaomi, but also against dozens of smaller and yet, incredibly efficient brands that are able to churn out low-cost, high-performance devices seemingly at will. The company is already facing increasing competition from not just home-grown vendors at the entry-level, but more importantly, from a whole host of Chinese brands at the mid-range, which is where the lion’s share of the profits are for most of these companies. On top of that, the world’s largest smartphone market has been seeing sluggish sales over the past few quarters, mirroring the global slowdown in the overall market.
With all those factors seemingly stacked against Micromax, some analysts and market observers have expressed their disbelief at the company’s latest move. According to IDC analyst Ms. Kiranjeet Kaur, “I’m not sure why they’re doing this. The Chinese market is not growing and it’s really competitive. I don’t know how they will survive there”. Micromax, however, believes it will not just be able to survive, but thrive in the highly-competitive environment in China. According to Micromax’s co-founder, Mr. Vikas Jain, the company wants to become the fifth-largest smartphone vendor in the world by volume in four years’ time, which simply would not be possible without access to the Chinese market. He also revealed that the company hopes to raise money within the next couple of years either from private investors, or through an IPO (Initial Public Offering).