Leading Chinese smartphone brands Vivo and Oppo are changing their distribution strategy in India by appointing Indian distributors in each state. This move aims to address longstanding conflicts with the Indian government and localize their distribution structure.
Previously, both brands had Chinese-owned and managed distribution companies in each state, referred to as agents. These agents supplied products to retailers through local distributors. Starting next month, Vivo will replace its agents in Delhi, Punjab, and Haryana with Indian distributors, and plans to extend this model to other states.
Vivo will absorb the Indian employees of these Chinese distributors or place them in the new local distributors. The Chinese expats will return to China. This change is also influenced by the fact that many expats who returned during the Covid pandemic are yet to come back due to visa issues.
Oppo has already implemented a similar structure in Delhi, replacing its Chinese distributor with an Indian one as a pilot. This model will be rolled out nationally, with the company in the process of appointing Indian distributors in other states.
The move to localize distribution comes as Chinese smartphone companies face increased scrutiny in India, dealing with allegations of customs duty and income tax evasion, along with money laundering. The Indian government has consistently urged these companies to use local contract manufacturers and Indianize their senior management.
While other Chinese smartphone brands like Xiaomi and Realme have been using Indian entities for distribution from the start, Oppo and Vivo are now taking steps to follow suit. They are also exploring smartphone manufacturing with Indian contract manufacturers.
As of calendar year 2023, Samsung leads the Indian smartphone market with 18% market share, followed by Vivo at 17%, Xiaomi at 16.5%, Realme at 12%, and Oppo at 10.5%. These brands are part of the BBK Group, which also owns OnePlus, Realme, and iQoo. The combined revenue of these brands in FY23 was Rs 81,870 crore in India, according to regulatory filings.
Oppo Mobiles India reported a 9% decline in sales in FY23 to Rs 51,994 crore, attributing it to tough market conditions. Meanwhile, Vivo Mobile India saw an 11% rise in sales to ₹29,875 crore in the same period.
