Chinese Manufacturers' Dominance Fades As Locally Produced Wearables Conquer Indian Market

The increase in wearables manufacturing in India is having a negative impact on Chinese assembly lines.

Many factories in China are facing a significant reduction in their order books as a result, Economic Times reported citing industry executives.

Top wearables brands like Boat and Gizmore are reportedly producing most of their products locally in key categories such as audio and smartwatches.

They are doing this through Indian electronics contract manufacturers like Dixon Technologies and Optiemus Electronics.

Gizmore's CEO, Sanjay Kalirona said that the shift in wearables assembly from China to India has left many factories in China without orders.

"Most of the factories (in China) that were assembling truly wireless earbuds, neck bands and smartwatches are sitting without orders," Kalirona was quoted as saying by ET.

"Earlier, we used to import completely built-up units (CBUs)," he said. "But after the government imposed duties on wearables, we started importing them in semi knocked-down format, which is getting assembled here," he added.

According to a report by IDC India, domestic shipments of wearables increased by 81 per cent Year-on-Year (YoY) in the first quarter of calendar year 2023 to 25 million units.

India has now surpassed China to become the largest market for wearables in the world, according to the report.

According to the market tracker, Beijing experienced a 4 per cent decrease in shipments, with a total of 24.7 million units.

The tracker predicts that India will surpass all other countries in 2023, with an estimated 131 million units shipped, compared to 100 million in 2022.

The wearables industry in India is dominated by local brands such as Boat, Noise, and Fire-Boltt, which account for nearly 75 per cent of the market share by volume, as per IDC.

This is in contrast to the smartphone market, which is largely dominated by foreign brands.

Locally manufactured wearables accounted for 40 per cent of total sales by the end of 2022. This figure has since risen to 65 per cent and is expected to reach 80 per cent by the end of 2023.

Boat CEO Sameer Mehta stated that the company now produces almost 75 per cent of its audio products and around 95 per cent of its smartwatches in India, up from 20-25 per cent of its annual volumes last year.

He added, "The capacities of Chinese factories that we worked with are now down 50 per cent because we have shifted that capacity to India."

Mehta stated that the shift towards local manufacturing in India has resulted in many factories in China operating at reduced capacities or shutting down altogether, as India has been the largest consumer of wearables in the past 18 months.

Boat collaborates with seven to eight partners in India, such as Dixon and VVDN Technologies, and six others in China, including Symphony and Minami.

The government's implementation of the Phased Manufacturing Programme (PMP) from April 2022 has led to a push for wearables manufacturing, with India aiming to manufacture Rs 8,000 crore worth of electronic wearables by FY23, up from negligible levels a year earlier.

According to experts cited in the ET report, the ramping up of local assembly has helped maintain the low average selling price (ASP) of wearables, following the imposition of a 20 per cent basic customs duty on CBU imports from April 2023.

IDC expects that the ASP will further decline to $23-25 by the end of 2023, down from $27 in 2022.