Oppo India To Cut Chinese Layer Off Local Distribution Network

Oppo India is changing its channel management to sell its smartphones directly to local distributors, undermining the Chinese foothold the company has built since its inception, industry executives said.

The development comes on the heels of a government crackdown on Chinese phone makers like Oppo to be distributed through their Chinese partners. India urges Chinese mobile phone brands to use only local distributors. But India's fifth-largest smartphone brand says it is scaling back its Chinese distribution to cut operating costs and improve logistics efficiency.

Oppo's channel sales have so far been conducted in a four-tier system. Oppo's headquarters in India is currently in charge of shipments to state-owned distributors, who bill local distributors, who then deliver to resellers, who pay customers.

The company is currently testing a new channel in Delhi since January 1, Oppo responded to a letter from the All India Mobile Retailers Association (AIMRA). ET reviewed a copy of the letter.

AIMRA's letter to Oppo, dated December 30, 2022, states that the smartphone brand's "Chinese state agent" will leave India from January 1 and Oppo will charge Indian distributors directly. This is creating confusion and fear among retailers about who is responsible for GST credit memos, promotions and TDS compliance, the retail association said.

Amid the India-China border dispute that started in 2020, Oppo India, along with other Chinese smartphone brands, faced repeated raids by the Income Tax Department, Tax Intelligence Agency and other government agencies for evasion tax. He was denied any previous offense.

Oppo India did not respond to ET's email inquiries about changing operations and releasing Chinese expats. According to a Hyderabad-based retailer, three of the Chinese distribution staff in Andhra Pradesh and Telangana are now in China and six of the eight Chinese in Karnataka have returned to China. A similar trend is observed in Rajasthan and Uttar Pradesh. In Delhi, Oppo has started charging local retailers directly. In a letter to AIMRA, Oppo said that SDB (state distributor) is "one of Oppo India's most important trading partners". But due to the "growing challenges of the distribution channel", the company is trying to reduce operating costs and improve warehouse and logistics efficiency. ET reviewed a copy of the letter.

We will test the new logistics mode in Delhi and send to distributors directly. The SDBs will assist Oppo India in sales management matters and their responsibilities will not change,” the letter reads.