A couple of days ago, we’d reported that Apple has sought the Indian Government’s permission to import refurbished phones to India. If you aren’t aware of the issue, we suggest you first catch up on it here.
Apple’s plans have hit a roadblock in the form of fierce opposition from “local lobbyists”. This newly formed lobby Mobile and Communications Council, has at its core Micromax, Intex, and Samsung — all brands that would face direct competition if Apple were to get the government’s approval.
What are they opposing?
The opposition has three major concerns with Apple’s plans:
- It will hurt local manufacturing
- It will hurt local recycling, and
- It will hurt local (read: their own) market of cheap phones.
Currently, Apple is struggling to maintain a foothold in the Indian smartphone market. With a market share of less than 2 percent, Apple needs to step up its game.
The problem with Apple’s market plan
The biggest barrier to Apple’s success continues to be the price. Over 80% of the phones sold in India are under INR 10,000. That’s just a little over $135!! In such a market, an iPhone costing upwards of $400 is too heavily priced, to say the least.
Big Western companies have had a long-standing history of providing cheaper variations of their premium products in India. Apple should ideally take that route as well. However, there’s only so much cost-cutting they can do without diluting Brand Apple.
That’s where refurbished phones come into play. They’re original Apple products available at … wait for it … half the price!
It goes without saying that these refurbished phones can help Apple tap into a much wider user base. So it’s crucial that they get an approval from the Indian government. And, of course, the competition isn’t going to sit idle as Apple poaches their target audience. They’re going to do everything in their power to stop Apple.
Allegations of Dumping
Members of the Mobile and Communications Council have used the Government’s own tagline to try and drive home the point. “Make in India,” they say, “Not Dump in India.”
Now “Dumping” is an economic process wherein one manufacturer floods the native market with cheaper products in order to severely undercuts the prices of its competitor. Very often the manufacturer bears heavy losses during dumping just to gain market space. (Japan did that to America with cars in the early 90s)
However that’s not what Apple is doing here. Even after the iPhone is refurbished, it will cost more than most Micromax phones (and almost every Intex phone in the market). And, in the process of selling refurbished iPhones in India, Apple is not going to face any losses!
So can we really call it “dumping”? Or is the Mobile and Communications Council, driven purely by fear and insecurity, using this term to make an argument that, frankly, doesn’t hold water? Whatever happened to free market, people? Adam Smith (the 18th century pioneer of political economy) will be turning in his grave somewhere right now.
The “Local Community” Angle of the Debate
Allegations of “disrupting the local economy” in India tend to be treated with emotions rather than reason. That’s why Apple has also been doing some “community building”. The announcement of a new office building in India that’ll lead to thousands of jobs over the years is a good start.
The Cupertino juggernaut is also looking to open new manufacturing plants in India. That ought to cut cost and bolster faith in brand Apple here. Two manufacturers have already signed up for it, and that’s good, because jobs are usually the best way to please the local community.
They Way Ahead
Apple sales are set to decline worldwide, so emerging markets such as India and Brazil are key if Apple has to stay afloat. Apple’s special treatment towards us is also beneficial in the long run because we are guaranteed to get better deals and services as customers.
However, for Micromax and Samsung, that’s a hard pill to swallow. They will naturally raise their voices and try and hinder Apple’s growth. Meanwhile, we are going to raise our voices and support Apple. Heck, anything for cheaper iPhones!
Are you with us?