Won’t make strategic investments on short-term opportunities, says OnePlus
The government on Wednesday relaxed FDI rules for overseas single brand retailers. Companies can now conduct online retail trading prior to opening of physical stores, subject to certain conditions.Updated: Aug 29, 2019 14:03 IST
Chinese handset maker OnePlus has said it will stick to its long-term approach and avoid making any strategic investments based on short-term opportunities in a market where it is already leading in the premium smartphone category.
The company’s comments come a day after the government relaxed foreign direct investment (FDI) rules for overseas single brand retailers to attract brands such as Apple, OnePlus, and others to open their stores in India.
The government has allowed companies to conduct online retail trading prior to opening of physical stores, subject to the condition that brick-and-mortar stores come up within two years from the date it starts online operations.
To provide greater flexibility and ease of operations to foreign single-brand retail entities with more than 51% FDI, the Union cabinet decided that all procurements made from India by the entity for that single brand shall be counted towards local sourcing of 30%, irrespective of whether the goods procured are sold in India or exported. Further, the current cap of considering exports for five years only was removed, to give an impetus to exports.
“OnePlus is committed to deepen its local manufacturing operations and is looking to scale up its production facilities to support exports to global markets. The new regulations will attract others brands to invest locally and accelerate development of local manufacturing ecosystem. We have a long term view for offline expansion and is already setting up its offline stores across all major cities through our local partners,” Vikas Agarwal, General Manager, OnePlus India, said.
“Given that regulations are still evolving and may change further in near future, we will stick to our long term approach and avoid making any strategic investments based on short term opportunities,” Agarwal said.
To be sure, OnePlus is already looking to increase focus on offline store expansion to boost sales of its premium phones. The brand has 12 stores of its own and wants to take this to 25 by end-2020.
The brand, which had entered India five years ago through an invite-only strategy for selling mobile devices, has now emerged as the leader of the premium smartphone market. It captured its highest ever shipment share of 43% in the premium segment in April-June, Counterpoint Research said in a note dated 30 July. Samsung had a 22% share, while Apple was at 20%.
Earlier this week, OnePlus said it will invest Rs 1,000 crore over the next three years to set up a research and development facility in Hyderabad to drive the development of artificial intelligence and machine learning across its products. The new investment will strengthen the brand’s position in India where it already leads the premium smartphone market.
The new R&D centre will house three labs — camera lab, communications and networking labs, and automation labs -- that will focus heavily on camera development, 5G testing, software with focus on AI and performance testing.
The phonemaker’s efforts to further expand the premium smartphone market, which accounts for less than 5% of the total smartphone sales, comes at a time when growth in premium smartphone category is outpacing the overall smartphone category.
Middle class incomes are rising and smartphones are becoming lifestyle statements than just devices. In fact, budget brand Xiaomi is also eyeing the premium segment, which may witness several launches from other brands in the second half of this year.