Rigid boxes boost, thanks to brands in the telecom space

As the Indian market reaches total shipments of 342-mn units in Q2 2018, rigid box makers have mushroomed across the country, say Abhishek Muralidharan and Rahul Kumar

12 Oct 2018 | By PrintWeek India

It was July. Samsung India launched its ‘Make for the World’ initiative, whereby it aims to export mobile handsets produced in India, to overseas markets.

With this new facility, Samsung will double its current capacity for mobile phones in Noida from 68 million units a year to 120 million units a year, in a phase-wise expansion that will be completed by 2020. 

A press release from the Korean major said, Samsung has been manufacturing mobile phones in India since 2007, and is the only brand that is truly made in India. Samsung India has been populating Printed Circuit Boards (PCBs) right from its inception and is aligned with the Government of India’s Phased Manufacturing Programme (PMP) goals.

On June 7, 2017, Samsung had announced an investment of INR 4,915 crore to add new capacity at the Noida plant, under the Uttar Pradesh government’s Mega Policy.
Which is why, the 10 rigid box machine brands that are available in India — are in aggressive marketing mode.

A glimpse into the past
The humble mobile phone penetrated the Indian households in the late 1990s. Soon the scratch cards became the preferred mode of gaining talktime for the mobile phones, the business of printing mobile scratch cards bolstered in the early years of the new millennium. Pre-paid mobile phone recharge coupons in the form of scratch cards were the ‘money’ that kept mobile phones ticking. The scratch cards printing market reached its peak during 2005-06.

Just when there was a slump in the post-2008 phase, the Ericsson Mobility Report, stated India is the fastest-growing smartphone market in the world. And the reports were true. More than 27.5 million devices were sold in the second quarter of 2016. Mobile subscriptions are expected to hit 1.4 billion by 2021. Consider the numbers. For the 27.5 million mobile devices sold, the manufacturers also need 27.5 million boxes (55 million if you consider top and bottom boxes as separate). 

Consider one bit of data: In FY17, Xiaomi, Vivo and Oppo mobile manufacturing companies together had combined sales of Rs 22,527-crore, a near eight-fold jump from Rs 2,919 crore they reported in FY16.

And competition in the premium market – where Apple has been traditionally strong – has intensified with new entrants such as OnePlus marking a strong pitch, besides a resurgent Samsung. The Koreans are here. And the market buzz is, Apple needs to manufacture models in India instead of only the iPhone 6 and the SE. The experts say, this will reduce prices by 20%, which is the import duty on every phone shipped into India. One reason: the iPhone is the most expensive kit in India, as compared with other markets such as the US or Singapore.

The top rigid box converters in India are producing three lakh to five lakh complete rigid boxes (top and bottom) in their production cycle. Sometimes it is for companies such as Intex, Karbonn, Panasonic and Ziox.

Two years ago, Gionee signed a MoU with the Haryana government to set up its manufacturing unit in Faridabad, with an initial investment of Rs 500 crore. The capacity of the facility will be close to 30 million units and Gionee plans to manufacture around six lakh mobiles per month from this facility.

This has proved to be an opportunity for high-end rigid box packaging. This is driven by the sales of mobile handsets, charger, USB cables, headphones, manuals, plus complementary accessories which are offered at the time of mobile handset purchase. Rohit Rajpal, director, Zhongke India, says, "In order to support branding objectives, phone manufacturers are focused on providing Indian customers with good quality packaging. All this is expected to boost the growth of mobile phone packaging market."

Team Zhongke India at the recently concluded IndiaCorr expo

Which is why the rigid box segment has been dominating the conversations in the last few months. A major player has set up shop outside Hyderabad for the first time to be close to its telecom partner in Delhi NCR. Other competitors are running 20 automatic lines and 10 automatic lines, 24/7. In addition, nearly 50% of the packaging converters WhatPackaging? magazine spoke to during the IndiaCorr 2018 exhibition in Mumbai have shown an interest and willingness to invest in a rigid box line in the very near future.

This explains the 130 automatic rigid box machine installations within a short span of time. Rajpal says, “The Indian market has recognised the potential for rigid box packaging. Many companies have set-up rigid box manufacturing facilities. Zhongke India has overseen more than 45 installations of rigid box making machines in India in the last three years for production of high-quality boxes in various sectors” Zhongke has improved its machines to cater to high volumes by increasing the production speed to 38 boxes per minute. As Rajpal says this is only the tip of the iceberg.

Global smartphone trends

  • Samsung shipped 71 million units
  • Huawei shipped 54 million units
  • Apple shipped 41.3 million units
  • Xiaomi and Oppo occupy the fourth and fifth spots in the global smartphone tally, while Huawei overtook Apple and edged up to the number two slot in the global smartphone rankings.
  • IDC estimates that vendors shipped a total of 342 million units during the second quarter of 2018. This is a decline of 1.8 per cent from the year-ago period.