OPPO to Invest 2.2B Yuan to Build Factory in India

Chinese mobile phone maker OPPO, which entered India four years ago, recently received a qualification for environmental assessment for its local mobile phone factory from the Indian government.

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India’s NDTV reported the OPPO plant is located in Greater Noida, India, and was built with a total investment of 22 billion rupees, or about 2.26 billion yuan.

OPPO follows Apple, Vivo, Xiaomi and Huawei in building an Indian factory.

Many companies build factories in India because of the large market scale and India’s high import tax rate on consumer electronics.

India’s new Goods and Service Tax came into force on July 1.

According to the tax code, all mobile phone machines imported into India must pay a 35 percent to 40 percent value-added tax in addition to a basic customs duty of 10 percent.

Mobile phones made in India only have a 12 percent value-added tax.

Xiaomi, which already owns two factories in India, has benefited from being able to get around the import tax.

According to market research firm IDC, Xiaomi tied for first place with Samsung in the third quarter with 9.2 million units shipped in India during the third quarter.

OPPO is also growing fast in India. OPPO had 79.74 billion rupees of sales in India in the 2016-2017 fiscal year, which ended in March, up by 754 percent from the previous year, according to OPPO’s India subsidiary.

In contrast, Indian domestic mobile phone brands such as Micormax and Intex are down by 42 percent and 30 percent respectively.

However, not all the handset manufacturers that went to India were successful in building factories. Huawei is an example.

In 2014, Huawei’s Honor, a subsidiary of Huawei, entered India and quickly began producing low-end models such as Honor Holly in Huawei’s Indian factories.

For more than three years, neither Huawei nor Honor has been able to push into the top five in India. The two brands are also far less well-known than OPPO and Vivo.

Apple, which has the highest market value, is not doing well either.

In May, Apple’s contracted manufacturer, Taiwan Wistron Group, began producing the iPhone SE at its Bangalore plant. The Indian government did not meet Apple CEO Tim Cook’s requirements for favorable terms on imported components and specialized production equipment.

The Indian government said Apple’s demands meant giving Apple privileges which were unfair to other handset makers.

According to the GST tax system, India imposes a 10 percent basic tariff on all imported mobile phone components, such as batteries and SKD.

If the iPhone could be produced in India free from those taxes, it would be easier to control the price and increase the size of its production.

Apple has a 2 percent market share in India.

India said the GST new tax system is essential to support domestic manufacturing.

As OPPO, Vivo, Xiaomi and other manufacturers build more factories in India, the country is likely to become a manufacturing base for handset makers to export to overseas in the coming years.