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Chinese handset maker Vivo sets up assembly unit

Business Standard:  December, 2015

New Delhi: Chinese smartphone major Vivo has started manufacturing handsets in India to capitalise on various incentives and tax cuts offered by the government to promote local manufacturing. Vivo's Rs 125-crore mobile handset assembly unit with a capacity to produce one million handsets a month is a first in the country by any Chinese brand. It will help the company cut down costs by 10 per cent across its portfolio, Alex Feng, chief executive of Vivo Mobile India, said.

Vivo will initially manufacture 150,000 smartphone units a month. The company plans to increase it to 300,000 units a month forthwith, as local production will help it save on 14 per cent excise duty.

The firm will start its unit in Greater Noida by producing three smartphone models - Y11, Y21 and Y15S. Eventually, it will add other models to expand the tax benefits from local production. Various benefits including Modified Special Incentive Package Scheme, and sops offered through the Special Economic Zone in the locality led Vivo set up the unit, Feng said. The company will train its new work force in the plant, which will employ 2,200 people when in full capacity. Due to this manufacturing and cost reduction of 10 per cent, Vivo handsets are going to be cheaper by at least five per cent from now on.

Vivo, which recently replaced US beverages major PepsiCo as the title sponsor of the Indian Premier League (IPL), will also increase its promotional budget. It has allocated Rs 200 crore as advertisement and promotional budget for 2016, including Rs 100 crore dedicated to IPL. "India is strategically important for us and we will be strengthening our position by increasing domestic production, distribution and visibility of our brand," said Feng.

While Vivo estimates its sales to touch one million smartphones in the country in 2015, these initiatives will help it grow further in 2016. "In the past one year of our presence in India, we have reached 10,000 retail outlets in 400 cities, including 30 Vivo exclusive stores. We plan to expand our service network to 200 next year from the current 25," he added. The firm launched two India-specific models - V1 & V1 max - in 2015.