Gionee president sets out his ambitious plans for India
Smartphone giant set for US$112m Indian marketing blitz after opening 35,000 retail stores and 400 service centres across the country
Starting this month, one of Bollywood’s brightest and most-popular young actresses will become the new face of Chinese smartphone maker Gionee for all its marketing campaigns in India.
The choice of the 23-year-old starlet Alia Bhatt is perfect for what the company is trying to achieve in the country, says its president William Lu.
She’s young, she’s aspirational, she’s liked and recognised, and she’s exactly the kind of customer he hopes will be attracted by his smartphones.
Gionee Communication Equipment, one of China’s major smartphone suppliers, only entered the Indian market in 2012, but already it hopes to double its sales next year to more than 15 million units, in a market which has traditionally been a tricky hunting ground for Chinese companies, given the obvious culture differences.
Lu says the country has its very own multi-level consumption demand, but the starkest difference between it and the Chinese market is that India is still dominated by offline sales, or those from traditional stores rather than online.
As a result, brand building is key to wooing customers, especially younger ones, away from market-leader Samsung, and local Indian brands.
This year, Gionee plans to spend 7.5 billion Indian rupees (US$112 million) on its marketing and advertising, with Bhatt its star brand ambassador for the next two years.
Last year, the firm sponsored franchises in the Indian Premier League, a wildly popular cricket tournament in India, to help raise its profile.
“As Indian people are multicultural, using nine major languages, the market is inevitably segment-oriented. Brand differentiation is vital, as is standing out from the crowd,” Lu said.
“India’s youth is definitely our focus, because the average age of the Indian population is 10 years younger than Chinese.
“But one thing is very clear in India, that the offline market still plays a major role, and what we offer has to be affordable high-quality.”
After declining in the two previous quarters, smartphone sales in India picked up, with 27.5 million devices sold in the second quarter of this year, a 17 per cent rise year-on-year, which analysts have attributed squarely to rising sales of Chinese-made phones.
China-based vendor sales grew 28 per cent over the previous quarter, of which Lenovo group, Vivo, Xiaomi, OPPO and Gionee were the key drivers of growth, according to Karthik J, a senior market analyst at Client Devices, IDC India.
He told the national daily newspaper Indian Express recently that Indian brands such as Micromax and Lava have established a strong foothold in the country’s US$150 segment, but they are now facing increased pressure from Chinese vendors.
It’s the premium segment (US $300+), however, in which they have made the biggest impact, grabbing
a third of sales in Q2, from just 9 per cent a year ago, he added.
A graduate of the prestigious Tsinghua University, Lu is a veteran of the Chinese telecommunications industry. He joined Gionee in 2010 – after working for Konka Group, China’s first electronic Sino-foreign joint-venture – to create the company’s overseas business unit to expand its footprint to 50 countries overseas.
“As early as 2012, I started focussing on making India our second market after China.” said Lu.
“We are already seeing that China has been unable to sustain its high growth rate for smartphone sales. And after China, there’s only really one burgeoning market in the world with a huge population which can sustain economic growth in future, and that’s India” he said.
Gionee also plans to invest 5 billion Indian rupees setting up a 50-acre factory in the country, which will be capable of producing 20-30 million units annually.
“We have already confirmed the location of the site and plan to have it operational within two years,” Lu said.
“Our ‘made-in-India’ project should help save at least 4 or 5 per cent of Gionee’s costs, and the savings will be even greater when the company’s industrial chains mature further.”
Right from the start of its time in India the company has invested heavily in its burgeoning network of stores – an approach very different to those of its Chinese competitors such as OnePlus, Xiaomi and Lenovo, who rely much more on internet sales.
Over the past four years, Gionee has created a 13,000-strong Indian sales force operating out of 35,000 retail stores and 400 service centres to support its growing customer base.
But as most smartphone sales in India are made in-store, sometimes in remote parts of the country, creating brand awareness and an efficient after-sales service has taken a lot of effort, and huge investment, he added.
“They [our customers] now trust those stores because they have grown to know them. Shoppers in India have shown us they need to touch and experience the devices, before buying their first smartphone.” he said.
“Last year, we sold about three million devices in India and 30 million globally. This year, we are confident of reaching 7-8 million sales, which will account for 20 per cent of our revenues,” he said, “and I expect sales to double next year, to more than 15 million units.”
Along with Oppo and Vivo, Lu now claims the three Chinese brands combined have more than 13 per cent of sales in the Indian handset market.
All three of them focus on outlet retail sales.
“I don’t consider the other Chinese brands as my direct rivals.
“In fact, I think we should work together to take more market share off Samsung and the local brands that make the majority of its smartphones in India.
“I feel Indian people, especially younger customers, have become increasingly dissatisfied with their products and want new experiences – and we see that as a great opportunity,” Lu said.