Oppo India to cut Chinese layer off local distribution network - Economic Times

Oppo India is shuffling its channel management to sell its smartphones directly to local distributors, cutting off the Chinese layer that the company had set up since it began operations, industry executives said.

The development comes amidst increased government scrutiny on Chinese handset makers such as Oppo for operating through their Chinese partners for distribution. India has been pushing the Chinese handset brands to use only local distributors. India's fifth largest smartphone brand though said it is eliminating the Chinese distribution layer to cut operating costs and improve efficiency in logistics.

Oppo's channel sales have so far been routed through a four-layer system. Oppo India headquarters bills the state distributors - which are being removed now - for shipments, who in turn bill the local distributors, who then forward the stock to retailers, who then bill consumers.

The company is now piloting the new channel outreach in Delhi from January 1 onwards, Oppo said in reply to a letter from the All India Mobile Retailers Association (AIMRA). ET has reviewed a copy of the letter.

The AIMRA letter to Oppo dated December 30, 2022, said that from January 1 onward, "Chinese state agents" from the smartphone brand shall be moved out of India and Oppo India will be directly billing the distributors. This, the retailers' body said, is leading to confusion and anxiety among retailers over who will be responsible for claiming GST credit notes, promotions, and TDS compliance.

Oppo India, along with other Chinese smartphone brands, has faced multiple raids by the income tax department, the Directorate of Revenue Intelligence and other government agencies for alleged tax evasion, amidst continued India-China border tensions, which started in 2020. The company has previously denied any wrongdoing.

Oppo India did not respond to ET's emailed queries regarding the change in operations and exodus of Chinese expatriates. A retailer based out of Hyderabad said three out of four Chinese employees looking after Andhra Pradesh and Telangana distribution are in China presently, while six out of eight Chinese expatriates in Karnataka have moved back to China. The trend is similar in Rajasthan and Uttar Pradesh as well. In Delhi, Oppo has already started billing the local distributors directly. Oppo in its response to the letter to AIMRA said that SDB (state distributors) "is one of the most important channel partners of Oppo India". However, due to "channel challenge increasing," the company is looking to decrease operating costs, and improve efficiency in warehousing and logistics. ET has reviewed a copy of the letter.

"We will test the new logistic mode in Delhi and directly supply to distributors. SDBs will assist Oppo India in handling sales management matters and their responsibilities will not change," the letter said.

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