Vivo to invest $560 million in India for a new smartphone plant, while Pakistan lags behind despite a budding smartphone market

By Shaoor Munir on
December 18, 2018
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The Chinese smartphone company Vivo, which has a strong presence in sub-continent and Asian countries, is investing $560 million in India for a new smartphone plant.

Vivo is already part of a large profile of smartphone manufacturers who manufacture and sell devices in India, avoiding a variety of different taxes and tariffs to provide cheaper and more affordable devices in the country. Apart from Vivo, Xiaomi, Samsung, Apple, OnePlus, and Honor have opened their smartphone manufacturing plants in India in the past few years.
The push for ‘Make in India’ smartphones have changed the landscape of the Indian smartphone industry over the past few years. India is now the second largest smartphone manufacturer in the world, making it one of the biggest smartphone market both on producer and consumer indexes.
Vivo is investing $560 million to expand its existing facility in Delhi, India from 50-acre to 169-acre. A new manufacturing plant will also be built in the facility, drastically improving the production capabilities of Vivo in India.
The new manufacturing plant will create over 5,000 jobs at the start and will increase the production capacity of Vivo from 2 million smartphones per year to 50 million.

A worrying outlook for Pakistan

On the other hand, Pakistan has yet to push the local production of smartphones. Even with the vast amount of cheap labor readily accessible to investors, smartphone companies are still reluctant to set up their manufacturing facilities in Pakistan. When we dive a bit into the problem, there are a number of reasons which are making them reluctant to invest in local manufacturing plants. Issues like confusing tax structure, high tariffs on imports, less than admirable law and order situation, power supply issues, and rampant corruption faced by any new business starting in the country are a few issues which need to be immediately addressed.

Pakistan has a large and growing smartphone market. With more than 34 percent smartphone penetration in a huge population of over 200 million, it is a big market for companies like Vivo, Huawei, Samsung, and Nokia. But, unfortunately, we are still unable to convince them to open local manufacturing plants in Pakistan, leading to a huge import bill which is burdening the economy instead of creating new jobs and increasing investment like we have seen happening time and time again in India.

Instead, with the increased duties on imported phones, and no locally manufactured phones in sight any time soon, Pakistan is only increasing the burden on its existing smartphone market, instead of fostering and growing it to make it more enticing for smartphone manufacturers.

What needs to be done?

Apart from enacting immediate reforms in the taxation sector and improving ease of doing business for foreign companies, Pakistan also needs to take a hard stance to encourage production of locally manufactured smartphones. Making it compulsory for every brand who wishes to do business in Pakistan to manufacture a certain portion of their smartphones locally can be one step which might be able to push the industry in the right direction.

Unless we wish to keep falling behind India in every department related to technology development, we need to take some hard decisions to remedy this situation.

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