India is looking to restrict Chinese sales of smartphones under $150 to revitalize its faltering domestic market.
This would mean a blow to the already deteriorating economic situation of China’s Xiaomi Corp. and, by extension, the expulsion of Chinese firms selling phones under $150.
India, ”which is Xiaomi’s most important overseas market, with 66% of its smartphones priced under $150, according to IDC,” reported leading global market intelligence provider International Data Corporation (IDC).
It should be noted that the market value of Xiaomi’s shares plunged a further 3.6% yesterday, accumulating a 35% loss for the first seven months so far this year.
Under the new restrictions, Xiaomi would lose sales of between 20 million and 25 million units.
Other Chinese brands affected
Sales of smartphones under $150 made up one-third of the total Indian sales during the second quarter, with those from Chinese companies accounting for up to 80%.
The most affected brands would be Xiaomi and Realme. They supply at least 50% of the cell phones priced below $150. But with them would also sink the rival Chinese brands Honor, Oppo, Vivo, Tecno, Infinex, Itel, Zenith, and Transnational.
“The last twelve months weren’t great for Xiaomi shares, which performed worse than the market, costing holders 57%.” Simply Wall St. platform reviewed in April.
New Delhi has also found ways to block sales of Huawei Technologies Co. and ZTE Corp. equipment by urging wireless operators to buy alternative brands.
The government of Narendra Modi also banned apps produced by companies linked to the Chinese Communist Party (CCP), such as BGMI, which specializes in gaming. And Tencent is one of its biggest investors.
It should be remembered that once the border clashes between India and the CCP ended, during the summer of 2020, more than 300 Chinese apps were banned, including WeChat, from Tencent Holdings Ltd. and TikTok, from ByteDance Ltd.
Although Chinese products have deeply penetrated the Indian cell phone market, the procedures for achieving those results have been objectionable. Their dominance has not occurred “on the basis of free and fair competition,” criticized India’s technology minister.
On the other hand, the Chinese market has been hit hard by the decline in consumption, following a series of harsh clean-up, prevention, and pandemic control measures by the CCP.
“The lockdowns hit global demand and supply simultaneously by reducing demand in the largest market globally and tightening the bottleneck to an already challenged supply chain,” explained Nabila Popal, research director at IDC, in June.
While it is true that these failures of Chinese technology companies add to the chaotic economic situation in the large eastern country, Indian competitors will benefit.
Domestic companies such as Lava and MicroMax, which accounted for just under half of India’s smartphone sales, will have the market open to compensate for the absence of their competitors’ products.
China’s impoverished economy affects global cell phone sales
The poor performance of the Chinese communist regime-ruled economy is expected to negatively affect global marketing of smartphones.
“The smartphone industry is facing increasing headwinds from many fronts – weakening demand, inflation, continued geo-political tensions, and ongoing supply chain constraints,” Popal reiterated.
She added: “However, the impact of the China lockdowns – which have no clear end in sight – are far greater.”
Another issue hurting smartphone production is the dwindling supply of components, including microchips, according to a report by research director in IDC’s Enabling Technologies and Semiconductors team, Phil Solis.
“The bigger problem has been the tight supply of components such as PMICs, display drivers, and discrete Wi-Fi chips,” Solis explained.
IDC estimates that the global cell phone market will shrink by 38 million units this year, or 11.5% less than in 2021.
Apple’s products will be the least affected, according to a report by journalist Vlad Savov, who said: “The company’s steady performance is in contrast to its Chinese competitors, which recently suffered their worst drop in shipments since the outbreak of the pandemic.”
Also, smartphone shipments will decline by 3.5% to 1.31 billion units in 2022.
On the other hand, the CCP-regulated economy has deteriorated to the point where many wealthy individuals in the country have had to sell expensive personal items.
Several cases were reported last week, including a man in his 30s who wanted to sell his luxury items worth up to $440,000, including watches, handbags, and jewelry, store owner Li Yi recounted.
There have also been dozens of cases in which the top items offered for sale are luxury Hermès Himalayan handbags, which were selling for an average price of $220,000 each, in 2020.
Some of these sales were motivated simply by their owners’ need to make ends meet.
In the range of Chinese billionaires, an estimated 10,000 have sought to emigrate to other countries this year. Each person would take out of the country about 4.8 million dollars, on average.
That is, some $48 billion in investments would flee, according to estimates by London-based investment consultancy Henley & Partners.
However, for members of the communist elite, the so-called red aristocracy, the economic situation is so prosperous that its members tend to exhibit it unscrupulously.
The Translating Great Movement (TGTM), which shares information that is trending in China, published a message that points to one of the “little princes,” just 14 years old, flaunting his Lamborghini.
“It is said that Zhang Shijia, the descendant of Deng Xiaoping and the grandson of Deng Pufang, has shown us the bright future of Communism—driving a Lamborghini at the young age of 14,” tweeted TGTM, Aug. 11.
Certainly, the CCP-regulated economy has been deteriorating extremely rapidly, not only affecting the realm of cell phones. Xia Yifan, a China expert and current affairs commentator, believes the economy is in recession.
Small, medium, and micro enterprises, without government support, have closed by the millions. Xia assumes that this is just the beginning and that the economic recession is unstoppable.
This is all bad news just three months before the leader, Xi Jinping, may run for a third five-year term.