Starting from first week of October 2016, the Flex manufacturing plant in Chennai will manufacture one of the Honor smartphones models, the company said.
The plant will have the capacity to make three million units by the end of 2017.
In addition, Huawei will be strengthening its after sales services in India with over 200 service centers, including more than 30 exclusive Huawei service centers in India, it added.
Huawei is one of the oldest Chinese phone brands in India, and was a big supplier to Reliance India Mobile as early as 15 years ago.
However, the company has not managed to compete well against more nimble rivals from its home market — such as Xiaomi and OnePlus — and has fallen behind in the Indian mobile phone market in recent years.
In addition, many of the newer players like Xiaomi are very aggressive in cutting costs. Besides keeping marketing and promotions to the minimum, they also save money by relying on online sales channels and via local manufacturing.
The tax and duties paid of smartphone components is considerably lower than that paid on fully assembled devices, helping these companies save money.
According to a recent, the cost of labor in China has gone up so much that in some cases, India is actually cheaper as a manufacturing destination.
Besides, most of the phone assembly process is fully automated, and the cost of operating an automated assembling unit in India is comparable to that of doing so in China.
Huawei, on its part, has been trying to take on the low-cost players by floating a sub-brand called Honor. Though Honor saw major traction when it was introduced in India three to four years ago, its prices have remained high even as others came up with lower cost offerings.
“India is a very important market for Huawei and the company has renewed its focus on India working with two brands, Huawei and Honor, to cater to the widest cross section of consumers,” the company added.
Huawei said it will expand its distribution network by partnering with more than 50,000 retail outlets by the end of 2016.
“This retail network will add to the existing 350+ distributors in India to create a comprehensive, nationwide distribution system. Huawei, over the years, has established global appreciation for its products, both under the Huawei and Honor brands.”
Announcing the manufacturing facility from Delhi, Ravi Shankar Prasad, Union Minister for Information & Technology, Law and Justice said the government is working towards making India an electronic manufacturing hub.
“As India is set to become the second largest smartphone market, our government would like to invite even more businesses to come and manufacture in India. This is an opportune time to start manufacturing from India. The smartphone landscape in India is growing every day and such initiatives by technology leaders will help accelerate the growth of local manufacturing industry in India.”
Jay Chen, CEO, Huawei India said Huawei has been consistently expanding our footprint in the market.
“This year especially has been of significance in our India journey. We recently launched our world class GSC in Bengaluru and the start of manufacturing in India is an affirmation of our commitment to India and supports the Make in India campaign. We are convinced about the growth potential and future of India and we’ll keep looking for opportunities to increase our presence here”.
Adding further to the development, Peter Zhai, President, Huawei India Consumer Business Group stated, “We have seen significant acceptance of our smartphones in India over the last few years and have big plans for India. We have been evaluating a manufacturing unit for a long time and have partnered with Flex given their legacy, expertise and knowledge in providing sketch to scale solutions to leading companies globally.”
Huawei also has its largest overseas R&D Center and the recently inaugurated Global Service Center in Bengaluru.