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Motorola eyes India as export hub on escalating US-China trade war

Livemint:  May 14, 2019

Mumbai: Mobile handset maker Motorola Mobility LLC aims to make India its export hub for Latin America and Asia Pacific markets, a top company official told Mint.

“We have invested in our systems to become export ready. From India, we can export to the rest of the world," Prashanth Mani, Managing Director Motorola Mobility India, told Mint in an interview. “This is being done to bring supply chain and cost efficiencies, which would drive our profits. India will act as an alternate base of production for smartphones as it has cost structures similar to China."

The company has a manufacturing plant in Sriperumbudur in Tamil Nadu that was set up about three years ago and currently manufactures phones for the Indian market.

Once a popular player in the affordable and mid-price segment in the country, Motorola’s market share in India has steadily declined due to stiff competition from Chinese smartphone makers. In 2018 Motorola’s India's smartphone shipments declined 70% year-on-year (YoY) basis. Motorola's market share dropped from 6th spot in 2017 to 12th in the domestic market in 2018 according to Counterpoint research a global industry analysis firm headquartered in Hong Kong.

The shift in production base by Motorola Mobility, owned by China’s Lenovo group, assumes significance in the backdrop of the White House raising tariffs on more goods imported from China, which is expected to make Chinese goods more expensive for US consumers, hitting their competitive edge.

On Friday, US President Donald Trump hiked import tariffs on $200 billion worth of goods imported from China to 25% from 10%. The move came after talks between Robert Lighthizer, US trade representative, and Liu He, Chinese vice premier, failed to come through on Thursday. On Monday, China vowed to retaliate by raising its own tariffs, escalating the trade war.

“Presently most of the exports to the US market go from plants in China, while some of Latin American countries, including Brazil, have their own manufacturing units, similar to India. But many countries still import from China," Mani said.

The prolonged trade conflict between Washington and Beijing has hit several smartphone manufacturers, including Apple, the world’s third largest smartphone maker, which saw its shares fall nearly 6% on Monday following reports of renewed escalation in the US-China trade war.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.