Importing Earphone and Headphones (Combined)..............
HS Code : 85183000
Usage of earphones and headphones in India has been increasing at a rapid clip, in tandem with mobile phone and Internet penetration. And that should be music to the ears of importers of the product as production lags demand by a huge margin.
The one thing that is ubiquitous when you are seated in a flight, riding on a train or taking a walk in the park, are earphones. Look around and you will see that most people, regardless of age (well, the young a little more than the middle aged people) have their earphones on and plugged to their mobile devices. Even the variety that is available boggles the mind. There are wired and wireless earphones – earphones that are available for as low as Rs.50 and acoustic noise cancelling headphones that can set you back a cool Rs.1,00,000 or more. The array of colours that they are available in, covers the entire spectrum of colours with some available in fluorescent colours too. And they are available everywhere. From online stores like Amazon and Flipkart to the snazzy upscale malls and even your friendly neighbourhood mobile store, everyone seems to have a wide range of earphones and headphones in stock.
By the looks of it this seems to be a huge market, and why not? In India, close to 18% of the population comprises of people between 15 and 24 years and 41% of the population is between the ages of 25 and 54 years. Apparently, they all form the target market for earphones and headphones. Well, we are talking about close to a billion customers!
This market of mobile sound accessories, especially headphones and earphones, surely seems humongous and worth a look for any businessman looking for a good opportunity.
But let us not just go by demographics. It can be deceptive. Let us also look at the hard cold facts about the global mobile telephony and Internet market. In February 2016, India surpassed US to become the second largest mobile market in the world. And, for the record, there are already a billion mobile phone users in India. The Ericsson Mobility Report released in June 2016 also mentions that India will enjoy 1.37 billion mobile subscriptions by 2021, out of which 810 million users will have smartphones.
The report further states that India’s usage of Internet is catching up and those aged between 16 and 34 years have a high dependence on online content, and about 450 million users are expected to be accessing Internet through mobiles by June 2017. These users will increasingly consume YouTube videos, music, or movies online, all of which will require the user to plug in earphones. Add to this the number of people who use headphones for business and professional applications and the fact that the life of an earphone is less than a year and you truly have a huge market.
You would think that given such awesome numbers Indian manufacturers must be making hay in this business.Sadly that is not the case, and despite the government trying to push mobile and mobile accessories manufacturing in India through its Phased Manufacturing Programme (PMP), the fact remains that we do not produce enough earphones and headphones to be self-sufficient. In simple words, India does not have the bandwidth to satiate the domestic demand and depends on its imports.
"INDIA'S IMPORTS OF EARPHONES AND HEADPHONES WITNESSED A 27% YEAR-ON-YEAR JUMP IN FY2017"
In FY2017, till February 2017, India had already imported headphones and earphones worth $175.07 million – which is 27.03% more than what it imported in the entire FY2016. Even last fiscal had seen a y-o-y jump of 17.55% in imports of headphones and smartphones. Importers too agree that the demand has shot up in recent years.
The mention of China is not surprising – especially when it comes to mobile accessories like headphones and earphones. China not only met 72.14% of India’s demand in FY2017 (till February 2017), but it is also the largest exporter of earphones in the world. In CY2016, China’s exports of headphones and earphones to the world was worth $3.60 billion, which is approximately 35.21% of the world’s total exports.
Other than China, Vietnam, Thailand and Mexico (in that order) are also major exporters of headphones and earphones to India – comprising 20.60% of India’s total imports of the product.
There is a valid reason as to why China has surpassed all these headphones and earphones exporting countries in the world – especially in the case of India. China-made products are pocket-friendly, the darling of the Indian consumers. Also, their products range is extensive and attractive, and their quality is consistent. “Importers always prefer China over other countries because they offer better price. Also, the look and feel of the products, and even the packaging are more attractive.”
Then there is more to choice of China as the preferred sourcing destination than price and quality. Importers feel Chinese manufacturers are open and accomodating about the importers requirements. The manufacturers in China are very open. They don’t hide anything from their clients. You can also visit their plants and observe each manufacturing process, as in startup importing from China is also not a bad idea. It would help to build an export strategy in future.
The entry-level products that range between Rs.100 and Rs.600 is a volume game and can fentch good profit margin for startups. Earphones and headphones in this price range come in a variety of colours and designs. This category attracts mostly the younger consumers because they are easy on their pocket.
As for mid-level headphones and earphones, the retail price ranges from Rs.600 to Rs.1,500. But, unlike the entry-level products, that are mostly popular among young people and tire II and III cities, mid-level products are popular amongst the working class. And though it isn’t a volume business, margins can be anywhere between 10% and 20%.
However, when it comes to high-end products that are priced over Rs.1,500, margins can touch as high as 30%. And this category, according to importers, is popular mostly amongst the professionals and people with specific interests.
And how does the future look for importers of this product? According to experts, the Indian mobile accessories market is likely to grow at 20-25%, y-o-y. And earphones will be consumed in volumes as penetration increases.
So, in absence of a major shift in manufacturing policies, importing earphones, especially from China, sounds like music to the ears. A high-end headphone with bluetooth, USB2.0, MP3, 32 GB Micro SD Card and FM, sourced from China, can garner a profit of 25%-plus in India’s wholesale market. No one would want to miss out on such an opportunity. Would you?