• Honor spent a year pulling its team out of India.
• Now it aims to relaunch in the country through a licensing deal with a local company. 
• It plans to launch three variants of Honor phones in India, which will eventually be manufactured locally.

Tensions have risen between China and India following a deadly military clash in 2020 over the disputed Himalayan border. Since then, India has banned over 250 Chinese apps and frequently investigated Chinese smartphone companies. So much so that China-based smartphone brand Honor, formerly a budget smartphone brand under Huawei Technologies Co, retreated from India around a year ago.

Honor’s retreat from India came after Indian authorities began scrutinizing several top Chinese smartphone brands over a few months in 2022. It started in February last year when Indian tax officials conducted searches at the offices of Huawei. Then in May, the Indian government seized US$725 million from Xiaomi over alleged illegal remittances after officials in January ordered the company to pay roughly US$87.8 million in past-due import taxes.

By July, India’s financial crime-fighting agency raided Vivo’s local offices and froze the company’s bank accounts on suspicion of money laundering. The Vivo rain was followed by the Indian finance ministry searching the office premises of Vivo’s sister brand Oppo, accusing it of evading US$550 million in customs duty.

The Indian authorities didn’t quite care that locals love Chinese smartphones and still intensified the scrutiny of three top Chinese firms — Xiaomi, Vivo, and Oppo. These three companies alone collectively control more than 60% of the Indian smartphone market, according to data from research firm Counterpoint mid-last year.

Yet, it was manageable for most Chinese smartphone players. Many leading Chinese smartphone makers in the Indian market eventually launched sub-brands or second brands to appeal to newer demographics. Even Honor had denied entirely exiting India but had only pulled its team out of India to protect the company’s interest and avoid further complications.

Even when the company CEO Zhao Ming was asked, he said that Honor had pulled its team out of the country for “obvious reasons. But he emphasized that the company will continue its operation, managed by local partners while adopting a “very safe approach.” Meanwhile, Indian manufacturers have attempted to develop affordable smartphones in the past few years but have mostly failed to make much of a splash among consumers.

Honor is making itself significant in India once again.

There is no denying that India’s love for Chinese smartphones transcends any political tensions, mainly because they are seen as a great value in a highly price-sensitive market. That may be why Chinese smartphone brands do not give up on the market quickly, because of their advantage over more prominent brands like Samsung and Apple.

“India was never a focus market for the Huawei Technologies-owned Honor until 2020 – when it was forced to spin-off the brand and reassess strategy,” said Neil Shah, vice president at Counterpoint Research. Honor is already in the Indian market through their Indian partner PSAV Global for their laptops, tablets, and wearables. 

The re-entry is meant just for Honor’s smartphones, precisely the Honor 90 smartphone already launched in some other countries. According to Reuters, Honor’s comeback is underpinned by a licensing deal with a newly formed Gurugram-based firm, Honor Tech, for an undisclosed “agreed-upon cost” tied to the transfer of technology and hardware.

Honor will launch three variants of its phones in India, with the mid-ranged Number series expected by September. “All the phones will be eventually manufactured in India,” CEO Madhav Sheth told Reuters without disclosing further details. Even Sheth reckons the biggest challenge is the Indian government and how can a Chinese brand be accountable in India.

Many may not be aware that the entry of Chinese vendors opened the Indian smartphone market, helping it grow in size and sophistication and driving the development of the local smartphone manufacturing industry. Now that India has become the second-largest mobile phone manufacturer in the world, the government is putting regulatory pressure on Chinese phone makers.

This year, according to the Indian newspaper The Economic Times, the Indian government has asked Chinese mobile phone makers in the country, including Xiaomi, Oppo, Realme, and Vivo, to appoint locals to crucial corporate positions, such as the chief executive, operating, financial and technical officers. They were also reportedly asked to appoint Indian contract manufacturers and local distributors. 

Perhaps that is why Honors have decided even locally to manufacture its phone for the Indian market.

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