Honor moving team out of India for 'obvious reasons,' says CEO

Small market share there anyway or Indian regulatory crackdown?

Chinese majority state-owned smartphone company Honor is pulling its team out of India, CEO Zhao Ming has confirmed.

Zhao told state-sponsored media outlet Securities Times during a launch event on Thursday that the reasons for doing so were "obvious." He did not clarify further but geo-political tensions continue to bubble between Beijing and Delhi.

The business in India will be operated by local partners, with a "very safe approach" said Zhao, who claimed the Indian market had maintained profitability.

The smartphone brand was owned by Huawei until 2020, and had once been widely geographically distributed. In October 2015, the company was on course to generate $5 billion in revenue, representing a doubling of products sold globally y-o-y.

"India is the most important market for us and over 300 engineers are working on the brand from India's research and development centre in Bengaluru," then vice-president of Honor international business Zhao Gang reportedly said in 2015.

Honor, which sells low to mid-range handsets, peaked in India in 2018 with a 3 percent market share. According to Canalys, vendors have been struggling with supply issues for low-end models, a tricky situation when the mid-to-low-end segment (and featurephones) are India's biggest sales segments.

The divestment of the Honor sub-brand was widely attributed to US sanctions that came into effect in May 2019.

In the latest figures for Q1 2022, analysts at Canalys said the Indian market had experienced only 2 percent growth in the quarter. The top two brands, Xiaomi and Samsung, saw a decline in shipments of 24 percent and 2 percent respectively. The pair combined have a 39 percent market share. Third-placed Realme, which had a 16 percent market share in the quarter, was the only named vendor who did not see revenue shrinkage, shipping 6 million handsets, up from 4.3 million in Q1 2021, representing 40 percent growth. Honor's market share is sufficiently small that it was included in the Others category.

India hasn't issued a Huawei ban to date and Honor no longer belongs to Huawei, but Indian government officials did conduct searches of Huawei's offices in February this year.

Huawei isn't the only Chinese company receiving scrutiny by Indian authorities. In May, the government seized over $724 million of bank deposits allegedly improperly moved offshore from Xiaomi and smartphone maker Vivo was raided earlier this month by tax authorities. Chinese tech company ZTE is also reportedly being probed in India.

With all the raids and probes, it's entirely possible that "obvious reasons" alludes to authorities moving in. But as Honor holds a steadily disintegrating market on the subcontinent now anyway, "obvious reasons" could mean it's just less economically viable. ®

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