Karbonn Mobile files for closure, all credits to Chinese brands

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We all have heard that 9 out of 10 startups fail within the first five years. But, does this trend apply to already established companies. We have seen publicly listed companies like Jet Airways, Kingfisher, Nokia, and Satyam fail.

And now Karbonn, one of India’s leading mobile phone manufacturer has surrendered. Giving a big blow to Make in India vision, the New Delhi-based budget phone maker has kneeled down, and the credit goes to Chinese manufacturers. Chinese brands have mesmerized the Indian market since last 3-4 years.

As per the latest filing with the Ministry of Corporate Affairs, Karbonn is shutting its operations. Founded in 2009, Karbonn used to be a prominent Indian brand churning revenues of INR 650 crores every year. The phone maker witnessed golden times when Google was compelled to partner with the firm.

Indian smartphone makers like Karbonn, Micromax, Lava, and Intex captured around 40% of the Indian smartphone market until 2016. However, the downslide has started and it can be witnessed as Karbonn is on its last step to wind up operations. The filing clearly shows that the company has filed for closure with the status being “Under Process of Striking Off”.

karbonn mobile strike off

Between 2012 to Q2 of 2015, Karbonn was among the top 5 smartphone manufacturers in India. It posed tough competition to Micromax which was the top brand at that time. Karbonn held a strong position in tier 2 and 3 cities.

However, since the Q3 of 2015, Chinese brands aggressively penetrated the Indian market with cheaper versions and world-class engineering. Brands like Vivo and Oppo used 360-degree marketing tactics to destroy the leadership of Indian smartphone brands. And by 2018, the combined share of Indian brands shrunk to 13%, which is now less than a mere 8%.

Last year, Karbonn bought Gionee’s India division for around INR 250 crores in an attempt to salvage their business and market share. Gionee had a market share of 2% at that time. But it didn’t work, as it is evident now. Karbonn was on the news in February this year for rumors of pumping INR 200 crores to strengthen its manufacturing unit.

According to research by Counterpoint Research, Chinese brands have taken over the Indian smartphone market and captured a whopping 66% of the market. That simply means that out of 100 smartphones sold in India, 66 are Chinese brands. Vivo witnessed a 119% surge in its market share.

Compared to last year, the share of Chinese brands has increased by 20%. While Oppo has witnessed a 28% increment in its market share compared to 2018, Xiaomi continues to be the topmost seller with around 29% market share. Indian brands including Micromax, Intex, Lava, and Karbonn only contributes 8% to the market and the closure of Karbonn may just be the starting of the downfall of the Make in India vision.

So, what are your thoughts on this story?
Tell us in the comments.

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