Xiaomi, Asus, Motorola, Lenovo Oppo, Vivo, Infocus are some of the smartphone manufacturing companies which are building offline retail chain in the view of the equal marketplace on both online and offline after the GST comes into the picture. The GST has brought all the platform to a neutral level which in turn gave a fusion of market to the public. Further, the mobile industry also demands some incentive to operate within the geography of India as the benefits of spreading technological gadgets is certainly make an impact in making digital India transformation.
The decision came after the GST taxation regime has cleared that the taxation will be applied in an equal portion in every state and making the business wide acclaimed in the environment. The smartphone brands have taken various strategic models under consideration including direct distribution, a partnership with giant retail chains, offline stores with an increase in advertisement expense. The strategy will be held applicable once GST comes into actualization after 1st July as told by senior executives of the company.
The director of smartphone retail chain hotspot, Shubhashish Mohanty mentioned that “all the online smartphone brands are expecting offline retail expansion as a prospective opportunity. While Xiaomi and Huawei are the ones who has taken steps at first, other brands are also following the same footsteps. Currently, online sellers get VAT advantage which will be discarded once the GST is in the application. In this scenario, the competition between offline and online trading will be similar.”
Presently online sellers operate in Bengaluru and Hyderabad where the VAT applicable is 5 percent. In other markets VAT applicable is much higher and the average is 10 to 12 percent. For this reason, the online smartphone companies sell the smartphones at low prices but after the GST roll out, the prices of the smartphone will be same everywhere. Also, the spread of smartphones will bring telecom sector some consideration to upgrading its technology after the GST roll out.
Xiaomi is trying to convert the online model into offline by which it will sell products directly to the retail stores from distributors. By this model, the middlemen can be excluded and the prices can be kept neutral on every platform. In the southern India, there are four big retail chains by which the company has contracted while the company is in talks with other retail chains also. While various companies are in the same direction like Asus and Infocus which will create an offline model more feasible to increase the market base of the company.
