How to evaluate the business environment in India? Searching for related topics on Zhihu, some netizens found the World Bank's "Global Business Environment Report" from the early years, which clearly pointed out that until 2020, India will still be one of the most difficult countries in the world to do business. The scope is limited to the fields of technology and consumer electronics, which have been the hottest areas of external investment in recent years. It is not uncommon for India to suppress foreign-funded enterprises. Xiaomi is the best example.
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However, even this cannot prevent India from becoming the world's most popular investment destination for technology giants: iPhone production lines continue to move south, and Google and Samsung have also invested heavily. Even Chinese companies that have received "key care" from the Indian government many times have difficulty resisting India's charm.
Recently, Honor once again reported that it will return to the Indian market. According to Madhav Sheth, who recently took over Honor's India business, Honor plans to return to India as early as the first quarter of next year and will produce smartphones locally.
What is the magic of the Indian market? The glory comes back again and again, what kind of wishful thinking does it have in mind?
(Picture from Honor’s official Weibo)
Divided and reunited, glory will never leave India?
Honor’s story in India began in 2014, which was the second year of Honor’s independent operation as a Huawei sub-brand and the first year of its internationalization strategy. India is one of the first overseas markets that Honor has entered, and is on the same footing as Britain, France, Russia and other countries.
However, the honeymoon period between Honor and India did not last long. Due to well-known reasons, Honor became independent from Huawei. Both internal organizations and external supply chains and production lines were completely divested. The severely weakened Honor chose to base itself on China and cut off a large number of overseas businesses. After announcing the restart of overseas business last year, India was deeply involved in the turmoil of suppressing foreign-funded enterprises, which made Honor stay away.
It is only in recent months that calls for Glory to return to India have intensified.However, according to interview materials exposed by foreign media, MadhavSheth did not say anything, but only stated that Honor will "make some key decisions" in the next few months.
According to Madhav Sheth, Honor is currently negotiating with three manufacturers and has invested 4 billion Indian rupees (approximately 350 million yuan) to establish local operation centers and distribution networks. In addition, MadhavSheth also revealed Honor’s sales in India. With the arrival of the peak sales season, Honor's goal is to achieve the sales target of more than 50,000 Honor 90 units through online and offline channels.
However, MadhavSheth did not disclose which models the new production line will be used to produce and its production capacity planning. The entire project is still full of uncertainty and requires continued consultation with potential partners. What is certain is that the localized production line in India will be responsible for the subsequent production of the Honor 90 series.
Fans who follow Honor’s updates should be well aware that this is not the first time it has been rumored to return to India.
In August this year, some media also broke the news that Honor would have "new news" in India. The outside world speculated that this was a signal for its return to India. Unfortunately, soon after the news came out, Honor issued an official statement denying the return to India.
According to Honor’s official response, since it voluntarily withdrew from India, Honor has been conducting business locally in the form of distribution, but has no plans to establish subsidiaries, factories or transfer technology. PSAV, the Indian retail giant that was widely discussed in the Honor return to India, is only a third-party partner. In addition to product distribution, Honor only gives the latter authority for publicity and promotion, and does not involve any production or research and development links. As for Wingtech Technology, another manufacturer rumored to take over Honor's foundry business in India, it has never acknowledged the above news.
It is worth mentioning that in the second half of last year, Honor CEO Zhao Ming talked about the difficult situation of Chinese mobile phone manufacturers in India in an interview. Zhao Ming admitted that "the actual pressure and difficulties are greater than predicted" and was unwilling to comment further on the decision to withdraw from the Indian market.
If there is anything different this time, it is the personal endorsement of Madhav Sheth, an executive.Madhav Sheth, as the veteran of Realme India, helped the latter become the top 5 in the Indian smartphone market in just five years, with impeccable business capabilities, experience, and connections. The poaching of MadhavSheth itself proves the ambition of Glory.
However, the past is still fresh in our minds, and India, an investment hotspot, has always been full of controversies. Is returning to India really a good move?
India’s “Besieged City” of Tech Giants: Growth Potential Coexists with Intangible Risks
People in the city want to come out, and people outside want to come in.
Mr. Qian Zhongshu may not have imagined that the sentence he wrote in "The Besieged City" would become one of the most widely circulated sayings in the business world, and would be widely used in the future to refer to various industries and markets where risks and opportunities coexist - such as India today.
On this side of the coin, India's business environment is still highly controversial, and the flight of foreign capital has not ended.
According to statistics from the local Indian media "Business Standard", more than 2,700 multinational companies have closed their subsidiaries/offices in India since 2014. In addition to Chinese companies, business giants from developed countries such as the United States, Britain, France, Japan, and South Korea, such as IBM, Samsung, and Vodafone, have also failed in India.
For the technology and consumer electronics industries, India's policies are particularly harsh and unpredictable. Apart from Honor, Xiaomi and vivo should be the Chinese mobile phone manufacturers that have the most grievances with the Indian government. I believe everyone has heard the story of Xiaomi. Vivo was also accused of tax evasion in 2022, and 119 bank accounts and nearly 400 million funds were forcibly frozen.
But on the other side of the coin, technology giants continue to squeeze into this besieged city, as if they were bewitched by the mysterious water of the Ganges.
Not to mention, in the past six months alone, Apple, Google and many other companies have intended to increase investment in India - even Samsung, which was fined US$200 million in 2014, is no exception. Similar to Honor’s current plan, these giants want to move their consumer hardware production lines to India to accelerate their encroachment on the local market.
Needless to say, Apple has said that Cook has personally visited India many times this year to speak out. In addition, Samsung Electronics originally planned to produce notebook computers at its Noida factory in India in October this year, with a planned annual production capacity of approximately 60,000 to 70,000 units. It is reported that the Noida factory is also Samsung's largest mobile phone factory in India. Google is working with HP to build a notebook computer production line in India, mainly used to produce Chromebook series products.
From Apple, Samsung, Google, to the possible return of Glory to India, some media hailed this series of measures as "key cases for technology companies to seek growth in India." There is no doubt that India's appeal to tech giants continues to grow even as controversy continues - even if these decisions are more or less controversial.
Focusing on the smartphone industry, the advantages and disadvantages of the Indian market are obvious.
The positive side is the potential: low smartphone penetration and weak local brands provide the soil for foreign brands to take root in India, and low labor costs save production costs.
Especially after Xiaomi was sanctioned, the competitive landscape of Indian smartphones is facing another reshuffle. Among the top five brands in the second quarter, only vivo, which ranked second, maintained positive growth, Xiaomi fell to third, and the gap between vivo and Samsung is very close. In troubled times, heroes are most likely to emerge, and no one is willing to let go of this opportunity.
(Image from Canalys)
Everyone knows the negative side: on the production side, low labor costs are accompanied by low technology levels and low work efficiency; on the consumption and business side, the ever-changing policies also make people confused.
Of course, we cannot just look at the problem on the surface. The values that India represents may not be limited to the present or itself.
This is the center of the South Asian subcontinent, adjacent to China, the world's factory, and Southeast Asia, the consumer market with the greatest growth potential. It has a strategic position that cannot be ignored. Especially on the production side, as India's labor advantage continues to increase and its role as a raw material logistics hub continues to increase, it has become a consensus to establish a bridgehead in India. Although the quality of India's current labor force is uneven, as long as the maximum balance between quality and quantity is achieved, it will still be beneficial to the operations of manufacturers.
From this perspective, Honor, who are betting on India, is not only interested in India - seizing India is just one step in their globalization strategy.
Is Honor making a big move in overseas markets?
Set your sights back on Glory. The aftermath of Xiaomi's fine has not yet dissipated. Honor's return to India will certainly attract strange attention and be widely discussed by all parties. But whether to return to India is not the core of the problem: India's strategic position in Honor's overall overseas expansion plan deserves our more attention.
As mentioned above, Honor announced a comprehensive restart of overseas business last year. Over the past year, it has continued to conquer cities and territories, and has made great progress in the markets covered and shipments. According to statistics from Counterpoint, Honor's total shipments in overseas markets increased nearly four times year-on-year in the first quarter of this year, and both mid-to-high-end and entry-level models have gained a large number of fans in different countries/regions.
In terms of regions, Latin America performed the most eye-catchingly, with shipments increasing by more than 700%. Shipments in Europe and the Middle East and Africa also increased by 400% and 500% respectively. By model, the best-selling region for high-end flagship models is Western Europe. The Magic series is Honor’s best-performing product in the United Kingdom, France and Germany; the entry-level models of the X series are very popular in Eastern European countries, especially the Honor X8.
(Image from Counterpoint)
However, it can also be seen from these data that compared to Europe and Latin America, Honor is weaker in the South Asian and Southeast Asian markets. If we can build a production line in India and accelerate the capture of local market share, we are very hopeful that it will help Honor reverse its situation in this large area: after all, mobile phones produced in India can not only be sold locally, but can also be supplied to nearby markets such as Vietnam and Thailand.
In other words, India may become Honor's production center in overseas markets and use it as a hub to establish a supply chain system covering the vast areas of South Asia and Southeast Asia.
In addition to policies, supply chain instability is also an important reason for Honor to withdraw from India. Zhao Ming once said that in the Indian mobile phone industry chain, 80% of small and medium-sized factories from China have closed down, and only large manufacturers such as OPPO and Xiaomi are still persisting. An important reason why Xiaomi still sticks to India despite being suppressed by many parties is that it has invested a lot of money in building factories and supply chains there, which can control costs and stabilize the lower limit.
The good news is that with the arrival of giants such as Apple and Samsung, India's smartphone supply chain is more mature than before, and manufacturers such as Honor are completely reaping the benefits.
Needless to say, Hon Hai and Pegatron are two major Apple OEMs, and the production capacity of Indian factories is constantly improving. According to Reuters, Pegatron started negotiations to open a second factory in India in March this year. More importantly, suppliers of core components such as chips, panels, and batteries have also followed the footsteps of Apple and Samsung and moved south to India. Establishing a localized supply chain in India is no longer a distant dream.
Returning to India can be seen as Honor’s big move towards overseas markets. This game of chess will take a long time to be played, and viewers don’t have to draw conclusions so quickly. Whether this move is good or bad will be tested by time.