In a significant shift in its policy, India has allowed Chinese smartphone maker Oppo to open its own single-brand retail stores. The move will also help rivals like Apple Inc, which are seeking similar approvals.
Although India allows foreign firms to sell directly to consumers through a ‘single-brand retail’ route, companies must source 30% of the products locally, reports Reuters.
The country moved to partially relax those conditions in 2016, exempting foreign retailers from the sourcing rule for three years in a bid to attract more investment.
Oppo is one of four phone brands, alongside Vivo, OnePlus and Imoo, owned by the Chinese firm BBK Electronics.
Oppo currently enjoys 8% market share in India and as per its current business model, it has expanded its presence in the Indian market by providing higher retailer margins. While most brands provide a margin of 8% to retailers, Oppo provides nearly 5% more, which is not very sustainable in the long run.
With the approval to set up single-brand retail stores, Oppo can now divert some of its funds to a strong retail set-up.
Apple too had applied for store licenses last year shortly after its Chief Executive Tim Cook made his first visit to India. It currently has a modest 3% market share and hopes to improve it with the opening of single-brand retail stores.