Indian mobile phone maker set to exit China, establish global export hub at home
By Atul Ranjan
NEW DELHI, NNA- Indian mobile phone manufacturer Lava International Ltd. is moving all its China-based research, development and export work back home as it looks to make the country its global export hub.
The company has also allocated 8 billion rupees ($105 million) to meet an expected growth in demand in both domestic and export markets over the next five years. Around one billion rupees will be spent this year to ramp up R&D, increase manufacturing capacity, among others, in India, a top company official said.
“We have almost shifted lock, stock and barrel from China to India,” Hari Om Rai, Lava International’s chairman and managing director, told NNA in an interview on May 19.
Production and exports will be completely back onshore within six to eight months, shipping smartphones and feature phones to over 20 countries including those in Southeast Asia and Latin America, Rai said.
Lava International’s move comes as foreign manufacturing firms in general feel more urgency to pull out of China – a result of rising costs, the Sino-U.S. trade war and factory shutdowns in February due to the coronavirus outbreak, among other reasons.
The Indian government has reached out to manufacturers with a 20 trillion rupee stimulus package to attract new investment and offer relief to the pandemic-hit firms. The package is part of India’s effort at recovering from the disease outbreak.
Rai, however, described Lava International’s re-onshoring as purely a business decision based on India’s advantages for mobile phone manufacturers.
“We have been preparing for this shift for a long time,” Rai said. “It wasn’t a sudden decision.”
The company has “almost sold off” its whole R&D facility in the Chinese technology hub of Shenzhen, Rai said. Lava International set it up about 10 years ago and employed 600 people.
Lava International had also used the Shenzhen site to produce phones for export, giving it one-third of its total revenue.
Now it’s looking to export markets as a revenue driver amid struggles to gain traction in India's crowded, competitive mobile phone market that’s dominated the Chinese and South Korean brands. Rai expects exports’ contribution to its overall revenue to hit 80 percent in near future.
In 2019, Lava International sold over 15 million feature phones and 1 million smartphones in India. The combined share of Chinese brands among Indian consumers reached a record 72 percent in the same year compared to 60 percent a year earlier, market intelligence firm Counterpoint Research says.
Lava was relatively strong in India’s feature phone market last year with a 13 percent share.
Feature phones make up more than 41 percent of the Indian mobile phone market, market research firm IDC says.
The South Asian country with 337 million smartphone users was the world’s second largest mobile phone market after China at the end of 2018, the Indian Council for Research on International Economic Relations, a think tank, said in an October 2019 report.
India is also the world’s second largest mobile phone-related manufacturing hub after China with over 260 factories that now make handsets, components and accessories, according to the Ministry of Electronics and Information Technology.
Government data show that the production of cellular mobile handsets has gone from 60 million units in fiscal 2014-2015 to 290 million units in fiscal 2018-2019.