Vivo lines up ₹3,500 crore investment in India

Vivo is also gearing up to develop the 5G products ecosystem for India and may also utilise the new manufacturing capacity for this purpose. Photo: Bloomberg

New Delhi: Vivo, India’s third largest smartphone maker, has lined up fresh investments of 3,500 crore, adding to the 4,000 crore announced last year, as the Chinese smartphone maker gears up to expand its manufacturing facilities in the country.

The renewed push by Vivo, part of China’s BBK group, comes at a time when companies in key sectors such as automobiles, consumer durables and fast moving consumer goods battle a slowdown in sales, forcing them to cut workforce among other costs. Smartphone sales have however remained robust with record shipments.

The investments is expected to expedite Vivo’s growth momentum in India, the world’s second largest smartphone market, where it has primarily relied on offline channels and advertising blitz to market its phones.

“India is an important market and is growing. We want to be a strong player here. The entire 7,500 crore investment would be deployed in phases to develop a new 169-acre land parcel adjacent to the Yamuna Expressway (on the outskirts of New Delhi),” Nipun Marya, director – brand strategy at Vivo India, said in an interview. “This would be used for two projects across four phases. We expect once fully deployed, this total investment could create employment for 40,000 people over 10 years”. Marya did not give a timeframe for the investments.

The company has so far invested 400 crore at its existing facility in Greater Noida where it can produce up to 25 million phones annually. This facility currently employs 7,500 people.

“The first phase of this plant’s expansion will go live next month and will increase the current capacity from 25 million to 33.4 million handsets annually from September itself. This will also increase employment at the site from 7,500 persons currently to 10,000 persons next month,” Marya said.

Vivo is also gearing up to develop the 5G products ecosystem for India and may also utilise the new manufacturing capacity for this purpose.

“In India, 5G networks will not be rolled out in the near future but when the market is ready, we will be among the first to bring in allied products like consumer electronics and wearables,” he said.

Vivo, which sells phones costing 9,000- 45,000, grew its marketshare to 15.1% as on end-June, from 12.6% a year earlier. The brand follows Xiaomi (28.3%) and Samsung (25.3%) by market share, according to data from International Data Corporation.

India’s smartphone market saw record quarterly shipments during the April-June period at 36.9 million units, a 9.9% yearly increase and 14.8% growth from the preceding three months. In the January-March period, total shipments grew 7.1% from a year earlier to 32.1 million units, according to IDC Asia-Pacific Quarterly Mobile Phone Tracker.

Vivo entered India in 2014 and has so far relied on offline channels to push sales. This strategy, however, is changing and it is now also using online sales channels. To be sure, 65% of all smartphone sales in India happen offline.

“Our recently announced Z series was primarily online. We are planning another launch in this series which will be sold online. We don’t believe that we are late in entering the online space. It is actually the absolutely right time to enter online sales channels as consumers are familiar with the brand Vivo,” Marya said.