MC Exclusive: Oppo, Vivo in talks with Dixon, Optiemus, other Indian cos for local units amidst growing scrutiny

Chinese smartphone companies search for potential partners

Chinese smartphone giants Oppo and Vivo have begun the search for potential partners for their India operations, engaging in preliminary discussions with various Indian companies in the handset sector, sources familiar with the matter told Moneycontrol.

"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," according the source.

This occurs amidst increased scrutiny of all major Chinese smartphone companies in India, which face allegations ranging from customs duty and income tax evasion to money laundering.

A second source revealed that Oppo and Vivo are in discussions with Dixon, Lava International, Optiemus, Bhagwati (Micromax), and UTL Neolyncs at different levels. "These Chinese firms seek stronger financial partners and are holding multiple rounds of preliminary talks with domestic firms approved under the Production-Linked Incentive (PLI) scheme by the government," the source added.

Another source disclosed that Dixon Technologies is exploring the possibility of acquiring a majority stake in the Indian unit of China's Transsion Holdings. "While these are initial talks, separate discussions are underway with Oppo and Vivo for similar partnerships," the source added.

The Indian government has repeatedly encouraged Chinese phone manufacturers to involve Indian partners in their local operations and appoint Indian executives in key leadership roles. It aims for the Indian partner to hold at least 51 percent of the stake in any potential joint venture, ensuring significant domestic influence in the mobile phone industry, which Chinese brands largely dominate.

Besides joint venture discussions, Chinese firms with manufacturing facilities are also in advanced talks with domestic companies to outsource smartphone manufacturing, leveraging PLI benefits.

Sources revealed that Dixon is in the final stages of onboarding Oppo and Vivo as customers. The company already manufactures smartphones and feature phones for brands like Xiaomi, Motorola, and Samsung.

Queries sent to Oppo, Vivo, Dixon, Lava, Optiemus, Bhagwati (Micromax), and UTL Neolyncs remained unanswered.

Meanwhile, Vivo and Oppo, both major brands under China's BBK Group, have begun appointing Indian distributors in each state to localise the distribution structure in India. Previously, they operated through Chinese-owned distribution companies in each state, a point of contention with the Indian government.

Chinese smartphone brands like Xiaomi and Realme have also employed Indian entities for distribution.

With the exception of Xiaomi and Transsion Holdings, Chinese companies such as Oppo, Vivo, Realme, and OnePlus currently lack local talent in top decision-making roles.

A senior executive from a leading Chinese handset company noted that despite government nudges, companies are yet to actively pursue local talent due to ongoing scrutiny and legal concerns. Decision-making on this matter may be postponed until after the general elections, the executive added.