After having focused almost solely on e-commerce services like Flipkart, Amazon, and Snapdeal to sell their smartphones in India over the past few years, several Chinese and Taiwanese companies are now looking to scale up their business in the country by expanding into offline channels. According to a report from The Economic Times, Huawei, ASUS, Xiaomi, Motorola, ZTE, and InFocus are just some of the companies that are apparently planning to lay more emphasis on offline retail, which still accounts for around two-thirds of the overall smartphone market in the country. With the much-vaunted Goods and Services Tax (GST) all set to replace the traditional Value Added Tax (VAT) from July 1st, the difference between online and offline pricing is also expected to be eliminated, making offline retail that much more viable for these companies.
With the new GST regime, all merchants across India will have to pay a uniform tax for their goods and services, meaning online retailers will not be able to take advantage of the low-VAT regime in states like Karnataka and Andhra Pradesh, which is where most of the e-commerce services are based. While most of the states in India typically charge around 10 to 12 percent in VAT on consumer electronics, the aforementioned Southern states charge only around 5 percent, allowing these online retailers to pass on the benefits to their customers. With retailers and manufacturers alike altering their marketing strategies in preparation for the upcoming change to the fundamental commercial tax structure in the country, many vendors who’ve been concentrating on e-commerce until now are said to be partnering with supermarket chains and specialized electronics retailers for direct distribution, cutting out the wholesalers to keep prices in check.
Chinese tech giant Xiaomi is one such company that is believed to be altering its distribution strategy to make an impact on the offline market in India. The company is currently leading the online smartphone market in the country by some distance but has already partnered with four big retail chains in South India - Sangeetha, Poorvika, BigC, and LOT. The company is reportedly in talks with a few other retailers and is apparently also planning to set up its own ‘Mi Home’ stores across the country, just like it has done in China over the past few years.