\"Vendor activity remained muted in Q2, due to falling demand and government scrutiny of Chinese manufacturers,\" said Sanyam Chaurasia, analyst at Canalys, adding that Chinese vendors shipped 76% of all smartphones in Q2 2022. \"Ballooning inflation has hit consumers' disposable income and vendors are struggling to cover their operating costs.\"
The top Chinese brands such as Oppo<\/a>, Vivo<\/a> and Xiaomi<\/a> also struggled with government scrutiny along with financial problems, but the report notes that the business impact has been limited, with no major changes in the vendor shares.
Xiaomi<\/a> retained the top position, with 19% market share, shipping 7 million units, despite ogranisational changes and government scrutiny.
Samsung<\/a> came in second place with 18% share, shipping 6.7 million units, boosted by a positive reception of its flagship S series.
Realme was placed third with 17% market share, shipping 6.1 million units. Vivo<\/a> and Oppo<\/a> had 16% and 15% share, shipping 6 million and 5.5 million units respectively.
\"Vendors are looking to leverage strong channel collaboration as smartphone inventory is alarmingly high,\" said Chaurasia, adding that brands will be using deep discount sales to get rid of stock before the holiday season kicks in.
Canalys expects brands to participate in monsoon season sales on Flipkart and Amazon<\/a>, with significant discounts to stimulate demand and prepare for upcoming launches in Q3. Brands are also expected to support offline retailer's margins to stimulate demand, helping them provide better deals to end users.
The report notes that the second half of the year won't benefit from pent-up demand like last year, but the rebound through the festive sales will be driven by replacement purchases.
However, the weakening Indian rupee, rising retail prices and Chinese brands' compliance risks are hindering growth in the sub-$200 segment.
\"The domestic environment remains cautious in the short term. A recovery in the mass market is contingent on proactive economic measures and adequate rains,\" the report added.
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