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Current Scenario of Metal Sector of India – How It Gets Affected By China’s Industrial Production Dip

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Current Scenario of Metal Sector of India – How It Gets Affected By China’s Industrial Production Dip

The stock market of China has plunged, thus it resulted in the crash of global metal prices that has worsened the revenue outlook for metal producers in India. This is due to the raising repayment concerns that took place in an already debt-laden sector. The experts have commented on this matter. And said that China accounts for more than 30% of the overall consumption of metals globally. The prices have further collapsed after witnessing a significant correction in prices in the last few months. This will have an impact in the Indian Metal Sector as well. For Indian metal producers, this collapse means the landed price for these metals in the domestic market will go down further, thus pressuring them to reduce prices. As China will dump its surplus production in various markets, the export demand may also fall.

When China was building up its infrastructure ahead of the 2008 Olympics, most of the Indian steel and base metal manufacturers invested heavily in expanding capacity. However, the manufacturers struggled to produce enough revenue to retire debts after the global economic meltdown the following year. It would be not wrong to say that the same country that took prices to their crest with its feverish imports and spending has been involved in bringing them down, with a large cut expected in its desire for metals as well as for other commodities that may hurt Indian manufacturers somewhere or the other.

The market analyzers say that when the prices will keep on falling, then it is obvious that the margins will get impacted. The manufacturers are mainly concerned about the cheap imports at prices lower than that in the originating country, which will be an unfair trade practice. The fall in revenue must be proportionate to the fall in copper prices for copper operations as per some research analysts. Whereas, Aluminium has its own dynamics as there is the impact of premiums and steel and iron prices. Even though the steel prices are at very low levels, still they may fall further. All this will impact earnings.

On 14 September 2017, the BSE metals index closed at 8,833.51, down 3.9% from the previous day. As the benchmark Sensex index closed at 27,687.72 points, down 1.72% from the previous day. On the same day, the Shares of Hindalco Industries Ltd closed at Rs.101.75 apiece, down 5.13% from the previous day, and Vedanta Ltd traded at Rs.146.10, down 7.85% from a day ago, while the shares of JSW Steel ended at Rs.849.10, down 3.13%.

Current Scenario of Mobile Manufacturing Industry – Is China Leading Ahead?

These days’ Chinese products do not have the same image, as they use to have a few years back. Earlier we have a perception about the Chinese product that they are cheap and low in quality. But now, China has improved the quality of products and captured the market. Even big companies like Apple Inc. are taking advantages of the Chinese supply chain efficiencies to reap higher margin by keeping costs low. Therefore, China is called as the World’s Factory. However, nowadays you might have heard about a campaign on social network site of boycotting Chinese products. This trending campaign is carried out to create a populist belief in India and its product. We know the fact that the major Indian Smartphone market chunk is still dominated by Chinese Smartphone brands. The Chinese companies are venturing with the Indian mobile manufacturers under the scheme of “Make in India”. This will be again a tough fight with the Indian Smartphone brands.

For India Smartphone companies, it might be a wake-up call. After China, India is slowly becoming the second most favorable mobile manufacturing destination for Chinese mobile companies. The Indian mobile industry is estimated to carry out the sales of 174 million units by the end of this year. Chinese mobile companies might take away the major market share. The Chinese companies witnessed a heavy saturation in their domestic market and the demand of its domestic consumers was sophisticated and complex to fulfill. Thus, the Chinese mobile companies started capturing the international markets after they faced an economic slowdown.

The growth of Chinese Brand in India

Since both the Chinese companies and the Indian companies have similar market structures, so it was easy for Chinese companies to penetrate in the Indian Smartphone market. Due to the help of major e-commerce players, India has turned into an easy expansion opportunity. The online-only business model has been successfully accomplished by Chinese brands like Lenovo and Xiaomi. Additionally, India and China share the same 4G frequency bands of 1800MHz and 2300MHz. Thus it is easy for Chinese companies to bring the latest products in India along with the home country, as no additional frequency bands modifications are essential. This can be proven with an example that the Chinese 4G Smartphone with support for the English language can be easily used in India without any issue. There are several other factors that are driving a sustained growth of Chinese Smartphone. They are competitive pricing, aggressive marketing, and faster adoption of the 4G technology of Chinese Smartphone companies. Furthermore, the integration of high-end specifications, importance on good cameras, and classy design are stuffed even into the budget mobiles.

The initiative taken by Indian Government has attracted nearly 25 mobile phone companies. Some of them are Lenovo, Xiaomi, Gionee, Oppo, LeEco, Huawei etc. Most of these companies have either started or likely to start manufacturing their products in India soon. As per reports, the Samsung has continued its number one spot with over 25.1 percent market share in Indian Smartphone market. Xiaomi captured the second spot with 10.7 percent market share. The third spot was held by Lenovo Group at 9.9 percent and Oppo and Vivo shared the later spots respectively. For the first time in a while, surprisingly, no Indian company is in the top 5 list.

In a Nutshell

Even though the Indian Smartphone industry is rapidly growing quarter by quarter, but still, the domestic makers are nowhere in the race at present. There are few international Smartphone brands, who took away the opportunities of domestic companies. Some of them are Apple and Samsung. Indian mobile companies will take time to regain the market share, but we believe that they will surely find ways to survive in the highly competitive market.

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