Report: Oppo & Vivo Consider Partnerships With Indian Manufacturers

Oppo and Vivo, two major Chinese smartphone manufacturers, are reportedly in discussions with Indian consumer electronics contract manufacturers to partner in smartphone production, according to a report by Moneycontrol. This development comes as Chinese original equipment manufacturers (OEMs) face heightened scrutiny in India over allegations ranging from customs duty avoidance to income tax evasion and money laundering.

Sources familiar with the matter revealed that "Oppo and Vivo have initiated initial discussions with several companies, including Indian contract manufacturers. They have also received interest from large Indian firms eyeing entry into the consumer space." The report suggests that Oppo and Vivo are currently engaged in talks with Dixon, Lava International, Optimus, Micromax, and UTL Neolyncs at various levels.

The increased scrutiny has already affected other Chinese OEMs, with Xiaomi and Vivo coming under the radar of the Enforcement Directorate in India. In light of this, the Chinese firms are reportedly seeking stronger financial partners and holding multiple rounds of preliminary talks with domestic firms approved under the government's Production-Linked Incentive (PLI) scheme.

Interestingly, Dixon Technologies, one of India's leading indigenous contract manufacturers, is considering acquiring a majority stake in Transsion Holdings' India operations, which includes brands such as Tecno and Infinix. The report added that "while these are initial talks, separate discussions are underway with Oppo and Vivo for similar partnerships."

The Indian government has been encouraging Chinese OEMs to involve Indian partners in their local operations and appoint Indian executives in key leadership roles. The government aims for Indian partners to hold at least 51% of the stake in any potential joint venture, ensuring significant influence in the mobile phone industry, which is currently dominated by Chinese brands, along with Apple from the US and Samsung from South Korea.

In addition to joint venture discussions, Chinese brands are also exploring the possibility of outsourcing production in India to manufacturing firms. For example, Dixon could soon become a vendor for Oppo and Vivo, as it already manufactures smartphones and feature phones for Xiaomi, Motorola, and Samsung.

BBK group brands, including Oppo and Vivo, have also started appointing Indian distributors in each state to localise distribution. However, the report suggests that local talent from Chinese OEMs is not being actively pursued, despite government nudges, as they await the outcome of the general elections. While Xiaomi and Transsion Holdings have key Indian executives in senior leadership roles, the same cannot be said for Oppo, OnePlus, Vivo, and Realme, as they all have country managers from China or managers operating out of China who make all the decisions.