Vivo India and Dixon Collaborate to Produce Smartphones in India

In an effort to improve local production skills, Dixon Technologies and Vivo India formed a joint venture to produce smartphones. As disclosed in a regulatory filing on Sunday, Dixon would own a majority 51% ownership under the arrangement, while Vivo India will own 49%. Both businesses made it clear that they would remain independent outside of the collaboration and not own any shares in each other's business. The agreement's financial details were not revealed.

The creation of final terms and regulatory clearances are prerequisites for the joint venture agreement, which is referred to as a binding term sheet. This move is in line with the Indian government's initiatives to support local manufacturing by promoting partnerships between Chinese and Indian companies. In order to resolve regulatory issues and improve adherence to Indian regulations, the government has been pushing for Chinese smartphone companies to collaborate with Indian organizations, hire Indian executives for important positions, and integrate Indian equity interests.

"We think that this partnership would strengthen Vivo's leadership in the Indian business community as well as our manufacturing competence and excellent execution skills. Atul B. Lall, Dixon's vice chairman and managing director, stated, "We want to work together to build a more robust, diverse, and future-proof organization."

Dixon, one of India's top electronics manufacturers, currently manufactures smartphones for well-known international companies like Google, Samsung, Xiaomi, Oppo, and Motorola. In addition to its current range, Dixon will now produce Vivo smartphones as part of this new relationship. The company will also be able to manufacture for other brands thanks to the joint venture, which will increase its presence in the Android ecosystem.
"The proposed joint venture will take on part of Vivo's OEM smartphone orders in India and can also engage in manufacturing various electronic products for other brands," said Jerome Chen, CEO of Vivo India, underscoring the strategic significance of the collaboration. This collaboration will successfully support Vivo India's current manufacturing activities.

Vivo recently opened a new production plant in Greater Noida and commemorated ten years of business in India. Built with an expenditure of Rs 3,000 crore, the 170-acre factory can produce 120 million cellphones annually. This new facility took the place of Vivo's previous production facility, which had a 40 million unit capacity and was later acquired by Bhagwati Products (Micromax).

The partnership exemplifies the government's "Make in India" campaign, which seeks to increase indigenous production and lessen dependency on imports. Vivo hopes to increase the competitiveness of its Indian business by utilizing the policy. It's unclear, though, if the joint business will also involve smartphone exports.

This year, Dixon has partnered with a Chinese company twice. For Rs 238.36 crore, it previously purchased a 50.1% share in Transsion Holdings' manufacturing division, Ismartu India. Dixon's position as a leading force in the smartphone manufacturing industry in India is further solidified by the Vivo relationship.

According to reports, Vivo had been considering similar partnerships with other Indian businesses, such as the Tata Group, but negotiations broke down due to differences in valuation. Now, this joint venture paves the way for Dixon and Vivo to expand their market share and support India's expanding role in the world's smartphone manufacturing industry.