India’s mobile market is growing at 23% CAGR and is said to have crossed 5.7 Billion mobile phone users in 2017. Gionee plans to move ahead in the market with new changes in hands which can prove to be a major step up for the company.
Chinese smartphone brand Gionee is reportedly selling off its India operations to promoters of handset maker Karbonn Mobile and the minority shareholder of Gionee India, Arvind R Vohra. The company will be entering into a long-term brand licensing deal which is likely to be closed in next two-three weeks. Reports stated that while the size of the deal will be worth $29.25 – $36.65 million (INR 200-250 cr), $18.28 million (INR 125 cr) would be paid outright for licensing.
A letter of intent and non-disclosure agreement was signed between promoter of Karbonn Mobile’s holding entity Jaina Group, Pradeep Jain and Arvind R Vohra. The agreement was signed with Gionee Communication Equipment, which is the parent company of the brand, for acquiring 74% stake in Gionee India in Hong Kong last Thursday. Vohra and his family already own the remaining 26% of the company. The Indian partners will have the right to use the Gionee brand for more than 10 years, rumors claim. They will pay a royalty to the Chinese company, while making an open payment to Gionee for the brand licensing. Both Vohra and Jain specified to trade partners that they will revive the Gionee brand before the festive season in October. They will launch feature-rich and aggressively priced smartphones in order to compete against market leader Xiaomi.
Arvind had previously discussed the opportunities of taking over the Chinese brand with a Noida-based Indian handset maker, but talks did not turn out fruitful which is when Pradeep joined the negotiation process. Vohra was the CEO of Gionee India and had stepped down in July last year when the company said that it would directly control the Indian operations. Global sales director at Gionee David Chang, was then started to lead the company’s Indian operations, while Vohra continued working as an executive director by virtue of being a shareholder in the company.
The company was recently planning to invest around $97.41 million this year. It is facing stiff competition from leading players like Xiaomi and Huawei, who are protecting their share by increasing the spending on marketing. As these players expand in the market, such businesses are flourishing in Tier II and Tier III.