Taiwanese tech companies as Asustek Computer Inc (華碩) and Acer Inc (宏碁) said their product sales in India have been affected by New Delhi’s unexpected demonetization policy last month, as it has weakened business activities and consumer confidence.
“Overall business activity is declining, with the effect on Asustek’s smartphone business appearing to be more obvious than on the company’s notebooks,” Asustek spokesman Nick Wu (吳長榮) told the Taipei Times by telephone.
India is one of Asustek’s fast-growing smartphone markets. The company has sold 3 million ZenFones in the nation and has a 2.5 percent share of the smartphone market, the company says.
Asustek’s PC sales, including notebooks, were the fifth-highest in the Indian market in the second quarter with a 3.3 percent share. However, it was overtaken by Apple Inc in the third quarter, International Data Corp (IDC) figures showed.
The Indian government’s decision to prohibit the use of 500 and 1,000 rupee (US$7.40 and US$14.80 at current exchange rates) banknotes from Nov. 9 had a domino effect on the country’s consumer electronics industry, as the majority of transactions are carried out in cash, so consumer purchasing power was severely restricted, industry sources said.
Asustek has decided to enact controls on marketing and promotional expenses in response to the changing market dynamics in India, Wu said.
Despite the drastic change to the market, “the freeze in market demand still looks manageable to Asustek,” as the country accounted for only 3 percent of the company’s total sales, Wu said.
Asustek sees the issue as a short-term problem and believes in India’s long-term economic growth momentum, Wu said.
Acer faced a similar situation.
It said the sales performance of its electronics products was affected by the government’s decision.
“Sales following promotional events were weaker than expected,” an Acer official said by telephone, adding that the firm’s notebook sales were hit harder than those of its smartphones due to their higher sales exposure.
The official said Acer is re-evaluating its promotion activities and considering calling off some upcoming events.
Acer is the fourth-largest PC vendor in the Indian market with a 9.9 percent share, IDC statistics show.
Revenues from the pan-Asia-Pacific region, which includes the Indian market, contributed 33 percent of Acer’s total IT hardware sales of NT$55.23 billion (US$1.74 billion) in the third quarter, according to company data.
Foxconn Technology Group (富士康), the world’s largest contract manufacturer, reportedly requested that about 25 percent of its 8,000 factory workers in India take two weeks of paid leave, as falling sales in smartphones in local market forced it to cut production.
The Economic Times on Monday said that Foxconn might extend the paid leave to next month if consumer demand remains gloomy, citing anonymous sources.
Foxconn did not respond to the Taipei Times’ request for confirmation of the report.
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