Heading towards self-eating - India's "WiFi module ban" is a bluff

Earlier this month, a new "old news", or a renovation of old news, came from India: India has suspended the approval of electronic equipment containing WiFi modules imported from China for several months. Generally speaking, some major mobile phone and PC manufacturers in my country such as Xiaomi, vivo, Lenovo, etc. will inevitably be affected, and American computer manufacturers such as Dell and HP have also reportedly postponed local product launches.

Reuters, as the source of the news, used the word "exclusive" before the title of the report, which seems to be self-made rhetoric. According to the information of relevant Indian government departments including customs, it is shown that since November last year, the Wireless Planning and Coordination Department (WPC) of the Indian Ministry of Communications has been refusing to approve the application for importing finished electronic equipment containing WiFi modules from China. WiFi modules are widely used in consumer electronic products, including mobile phones, Bluetooth speakers, smart bracelets, smart watches and laptops, etc. After all, electronic products now emphasize the installation of instant messaging functions, and WiFi modules are generally standard. Therefore, the suspension of the import of electronic equipment with WiFi modules from China can basically be considered as temporarily blocking the import channel of CE (Consumer electronics) from China. The timing of such reheated news on import and export restrictions on China coincided with the sudden outbreak of the epidemic in India and the loss of control. Even the mainstream public opinion in India believed that this was another round of political manipulation by the ruling team. Otherwise, it would be incomprehensible. It is already very difficult for international electronic product manufacturers to start work under the heavy pressure of the epidemic. If the infusion tube of Sino-Indian trade is cut off, how can India meet domestic demand?

Since November last year, such applications from more than 80 companies from China, the United States, South Korea and other countries have been shelved. In the era of globalization, mobile phone research and development and assembly have become highly internationalized. In order to maintain the superficial seriousness of its policies, the Indian government has had to cut its feet to fit the shoes and include applications from Indian companies that import finished products from China in the ban. It is unclear whether it has killed a thousand enemies, but it is a fact that it has lost eight hundred of its own.

India's "WiFi module" ban began to have an impact in the fourth quarter of last year and the first and second quarters of this year. Let's take a look at the Indian mobile phone market conditions of various brands over the past six months.

Due to a series of factors such as product production lines and prices, India's domestic consumption level has never been able to support an Apple mobile phone market of a certain scale (although Apple mobile phones exceeded 1.5 million units in India in the fourth quarter of last year), so brands such as Xiaomi, vivo, Samsung, and Realme have divided and surrounded the Indian mobile phone market.

Changes in India’s mobile phone market share from the third quarter of 2019 to the fourth quarter of 2020

At the beginning of last year, affected by the epidemic, the Indian smartphone market fell slightly by 4%, but in the second half of the year, it exceeded 100 million units for the first time. Xiaomi still maintained the highest market share in India in the fourth quarter of last year, at 26%, followed by Samsung at 19%; vivo and OPPO combined for 25%. However, almost all Chinese mobile phone brands saw a decline in their market share in India last year, with Xiaomi falling by 4 percentage points and Samsung rising by 3 percentage points.

The market share of mobile phone brands can only observe the impact of the "WiFi module ban" on enterprises from a relative perspective, but cannot directly respond to changes in import and export quotas. In fact, just half a month before Reuters revealed the introduction of this policy, on April 26, vivo also released two smartphones, iQOO 7 and iQOO 7 Legend, in India.

In the foreseeable future, India will not be able to incubate a purely local mobile phone brand with a certain influence, and in the short term, it does not have the infrastructure scale for companies to invest heavily in manufacturing IT products and smart wearable devices. Therefore, the two concepts of "nationalization" and "localization" of consumer electronics are essentially highly blurred and homogeneous in India, and the purpose of the WiFi module ban is very clear, that is, to force many mobile phone and PC manufacturers to increase the proportion of local production capacity, produce and sell by themselves, and simulate an Indian version of the "internal circulation" strategy for electronic consumer products.

Xiaomi's "Made in India"

Xiaomi Group has entered the Indian market for more than six years. It has been growing up in the Indian market and has a better understanding of policies than its competitors. Therefore, although the China-India geopolitics has occasionally impacted the company's "business is business" thinking over the past two years, the brand has gradually dug out its own set of safe havens.

Xiaomi Home in India (@Reuters)

Lei Jun, founder of Xiaomi, recently said that Xiaomi currently has seven manufacturing plants in India, and more than 95% of the products sold in India are manufactured locally. With BYD and DBG joining Xiaomi's partner team in India, plus existing local suppliers such as Sunny India, NVT, Salcomp, LY Tech and Sunvoda, which have extensive connections in the fields of communications manufacturing and mobile phone software, Xiaomi's localization in India has become a grand spectacle. Based on this, Manu Kumar Jain, general manager of Xiaomi Group in India, has the confidence to declare to the outside world that from the number of mobile phone components, Xiaomi has achieved 99% localization, and from the perspective of calculating the cost value of each mobile phone, Xiaomi's localization in India has achieved 75%. However, he did not disclose to the outside world which of the remaining 1% of mobile phone components still need to be imported from abroad.

Xiaomi's chief executive in India, Jain, said Xiaomi has completed localization in India

In any case, the spread and subsequent effects of the "WiFi module" ban will not become clearer until the second half of this year. For companies with a high degree of localization such as Xiaomi, it may only cause superficial damage at most.

India's WPC is full of power

The main force behind the ban on Wi-Fi modules in India is the Indian WPC, or Wireless Planning & Coordination, which is the agency responsible for regulating wireless regulations in India. All wireless products must obtain approval from the WPC before entering the market. The WPC is affiliated to the Ministry of Communications and Information Technology of India, which was established in 1952. Usually, issuing radio licenses and allocating spectrum is one of the main tasks of the WPC.

According to different working frequency bands, wireless product wireless certification in India can be divided into two modes: ETA (Equipment Type of Approval) certification and License. Because before November last year, ETA certification clearly stipulated that if the product had previously been certified by the EU CE or the US FCC, it could be exempted by self-declaration. Two years ago, WPC issued an announcement that ETA is not required for some wireless products using exempted frequency bands. For terminal products using exempted frequency bands, such as mobile phones, notebooks, tablets, smart watches, short-range transmitters (including accessories), microphones, speakers, headphones, printers, scanners, and cameras, type certification (ETA) can be exempted from application. Products other than the above still need to apply for ETA type certification. For most overseas companies, they basically only deal with ETA, and WPC certification is used as a synonym for ETA outside India. The reason why the WiFi module ban became news was mainly because WPC expanded the scope of its previous authority and used the term "WiFi module" to directly include the entry certification of electronic products such as mobile phones, computers, and Bluetooth headsets, which caused an uproar in public opinion.

The head of WPC, Indian Minister of Communications Shri Ravi Shankar Prasad, is an important member of the government cabinet and a so-called loyal practitioner of the "new policy of exploring India's local manufacturing". When he first entered the cabinet, he immediately tightened the 4G spectrum auction rights, and the auction amount hit a record high. Standing at the forefront of the digital economy, WPC's power is growing. Following a series of policies such as "banning Chinese apps" and "excluding Huawei and ZTE from 5G construction" by relevant departments, it has the confidence to increase the stakes.

The current WiFi module ban is equivalent to taking back the certification exemption rights for enterprises, and directly formatting the certification system in the form of product models and origins. If this regulation is mainly aimed at Chinese enterprises, it will inevitably "accidentally hurt" non-mainland Chinese companies such as HP, Dell and Asus. In this regard, Jiwei.com interviewed a well-known market analysis agency. People familiar with the matter told Jiwei.com that this incident is not only aimed at Chinese companies, but also faces all Indian overseas companies. In addition, the Indian legislature has not yet communicated on the relevant matters of WPC's non-issuance of ETA certification. In addition, ETA certification has no official deadline, and there is no procedure for re-applying for certification at a certain time point (similar to the US Department of Commerce BIS), so it is impossible to estimate the impact of WiFi module certification on the Indian shipments of Xiaomi, vivo and other companies.