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As the Chinese smartphone market continues to suffer from saturation and a slowdown in sales, local smartphone companies are increasingly turning their efforts to other markets for a revenue boost.

India has been the target of rapid localization from virtually every Chinese smartphone company that has the capital to do so, including Xiaomi, Huawei, LeTV, ZTE, Meizu, Lenovo, Gionee and OnePlus.

While many have kicked off their India presence with sell-out online sales, they are now racing each other down a decidedly low tech avenue, offline retail. The reason? 90% of retail in India is still offline, while approximately 75% of mobile device sales are still conducted in brick-and-mortar stores.

Following the launch of their MX5 flagship in India, Meizu revealed yesterday that they would be ramping up the number of offline service centers from 28 to 40 over 20 cities in India. “For the next few months, after-sales service will be the key focus for Meizu,” sais Li Nan, VP of Marketing at Meizu in a release. The company is currently in talks with iPhone maker Foxconn to begin manufacturing in Chennai.

Xiaomi, who has been locked in a virtual shoving match with Lenovo to be the top Chinese smartphone retailer in India, signed a deal three weeks ago with Redington to launch a pilot offline retail project over 10-15 cities by October. The Head of Xiaomi’s India operations, Manu Jain, noted that they expect offline sales to account for up to 33% of total India sales by the end of the year. Xiaomi is hoping to sign with at least one other Indian retail partner in the near future.

Lenovo’ strength in India could be traced back to its early adoption off the offline model. According to Sudhin Mathur, Director of Lenovo’s Smartphone Division for India, their offline sales currently make up 80% of total sales. The same can’t be said for Motorola however, which was recently acquired by Lenovo. They currently sell their mobile devices through Flipkart, the Indian e-retail giant who partnered with Xiaomi for their market entry. However Motorola released a plan in the last month to follow its parent company’s example with a push into the offline sector, likely leveraging Lenovo’s existing network of vendors.

Huawei also made strong moves into the offline market this year, offering its Huawei Honor flagship to selected brick and mortar stores for the first time in early June. The company joined forces with Sangeetha Mobile for the initial launch, though they are expected to extend the number of retail partners alongside their Chinese counterparts, targeting a 10% share of offline mobile device sales in India.

A handful of newer Chinese brands, including Xiaomi and Meizu, have made a verbal commitment to making India their biggest market outside of China. Currently, the top four Chinese players Lenovo, Xiaomi, Huawei and Gionee account for 12% of the total mobile market in India, double the amount of the preceding year. Companies have focussed strongly on low-cost 4G phones around the $150 USD bracket, and are hoping to stay in that price range throughout their move offline, targeting India’s large unbanked population.

Samsung still leads the Indian smartphone market, claiming last month that its market share had extended over 40% for the first time. Indian vendors Micromax and Intex also still outweigh the other companies by sale volume, though competition is expected to stiffen as Chinese sellers move offline.

@CateCadell

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