Huawei inks pact with Micromax to expand retail presence, but analysts wary of upside

Chinese tech giant Huawei has entered into a strategic partnership with Indian electronics company Micromax to expand its retail presence and reach in India.

While this partnership will be across online and offline channels, it will begin in the offline medium with Huawei aiming to reach more cities. However, the arrangement will not cover Huawei’s sub-brand Honor.

Huawei’s move to expand its retail presence in India comes on the heels of its skirmish with the US government, raising concerns over its growth prospects in the US, a significant market.

Rishi Kishor Gupta, Vice-President (Huawei brand), Consumer Business Group, Huawei India, told BusinessLine that the plan is to reach metros and Tier-1 cities this year and expand to Tier-2 and 3 cities next year. Huawei’s market share in the Indian smartphone market was at 4 per cent in Q1 2019, according to Counterpoint Research.

While Huawei said that its online sales are doing well, it aims to bring the physical experience of using its smartphones to users, and this is where Micromax’s offline channel strength would help. At one point in time, Micromax had 1,25,000 dealer relationships, according to Gupta.

‘No dilution of brand’

“We are not going ahead with a mass-channel approach. We are looking at picking the right set of stores where we can actually create the experience,” Gupta said.

Deepti Mehra, Head of Marketing, Micromax, said that the Indian company brings its “pulse on the market” and go-to-market strategy to the table. She also said that there could be possibilities to explore R&D and design with Huawei in the long term.

But Gupta stressed that the partnership is limited to go-to-market expertise at the moment. “I think our (Huawei’s) R&D will remain independent,” he said. He was also categorical that there would be no dilution of the brand with Micromax.

“It is not necessary that Huawei will only be available in Micromax’s channels. We are looking at retail outlets where our consumers are coming irrespective of Micromax being there or not,” he added. Mehra agreed. “We will continue to follow the roadmap we have for our individual brands,” he said.

However, industry analysts are not confident of this partnership. Micromax has not been very strong in the smartphone business over the past two years, they say. “Yes, Huawei needs to establish itself in the offline space, but you need to be at the point where there is higher potential for selling,” said Faisal Kawoosa, Founder and Chief Analyst, TechARC. “I don’t see it as a very strong case for Huawei to make phenomenal jumps,” he added.

Kawoosa also said that a tie-up like this is bound to happen, as Indian smartphone brands aren’t very strong in terms of manufacturing and are mostly just assembling phones.

COMMENT NOW