Advertising Industry Faces Loss Due To Ban On Chinese Products

Last month, India banned 59 Chinese apps in the country. Even as calls for boycotting Chinese products remained unfruitful previously, one wonders if the ‘vocal for local’ phase might just solidify the citizen’s call for the ban this time around. Due to this advertising sector may lose around 2500-3000 crores.

The on-going fight with China may not be constrained to borders and spill over to the media and advertising world, as Chinese organizations may hope to fix their handbag strings. As indicated by industry appraises, the media and advertising sector may lose up to Rs 2,500-Rs 3,000 crores regarding advertisement spends. Shashi Sinha, CEO, IPG Mediabrands disclosed to BrandWagon Online “Premium properties, for example, the Indian Premier League (IPL) will endure to great extent and will require an alternate sponsor.” As indicated by industry appraises, the Chinese cell phone brands add to about 3%-4% of the overall advertising business, which remains at over Rs 70,000 crore in India.

As per the business intelligence firm, Tofler, Chinese smartphone makers such as Oppo, Vivo, Xiaomi and OnePlus spent a total of around Rs 2,700 crore on advertising in FY19, registering a 6% growth as compared to FY18. “Home-grown brands or for that matter other companies may not be able to compensate for the loss in the advertising expenditure especially in the short run,” a senior media planner said on conditions of anonymity. Market intelligence firm Counterpoint’s report for Q1,2020 stated that Chinese smartphone companies have taken over 50% of the market share in India. South Korean company Samsung has about 16% market share while Indian smartphone companies have a minuscule 0.2% market share.

Media planners believe that in India Chinese brands’ markets with their deep pockets as well as a larger share and hold a strong foothold in the advertising sector. When approached, Xiaomi, Vivo, OPPO declined to comment and a mail sent to OnePlus remained unanswered.

A five-year deal for IPL title sponsorship that ends in 2022 Vivo alone contributes Rs 440 crore annually to BCCI. The brand had also signed a five-year deal with Pro Kabaddi League worth Rs 300 crore in 2017. Industry analysts observe that the Chinese brands will not move out completely – but in the short term, there will be a dent on ad spend, given their silence in the media. Lloyd Mathias, angel investor, and business strategist said “Given that most of these brands are large spenders – with Vivo and Oppo being big investors in cricket – I would expect a drop of between 4%-6% on overall AdEx during this period.”

A leading broadcaster said, “As for the news genre, Chinese handset brands are medium-sized advertisers, hence it won’t be a big loss in terms of ad revenue. Moreover, other companies in the same categories won’t mind picking up their advertising space on television. So, from a news network’s perspective, Chinese smartphone companies are not significant enough advertisers that their loss will worry about the networks in any way,” he also explained. Whereas, others believe that the ban may impact the larger interest of the country as a sizable portion of the components are manufactured here. Satbir Singh, founder, Thinkstr said, “A ban will hurt Indian employees as well.”