Consumer electronics co Hyundai Corp to re-enter India

Hyundai Corporation has re-entered the Indian consumer electronics and appliance space after exiting the market over a decade ago. The South Korean multinational has partnered Akshay Rajkumar Dhoot who acquired the brand licence rights for India region, which is renewable every five years.

His venture Hyundai Electronics India is an independent Indian company and not a subsidiary of the Korean multinational.

Dhoot earlier was chief technology officer of Videocon Group’s consumer electronics vertical and had joined the family business back in 2015. The partnership with Hyundai Corp is Dhoot’s own venture and has no connection with the family business.

Speaking with DNA Money, Dhoot said the Hyundai Electronics India business has no association or connection with Videocon. “I have been planning to start my own consumer electronics brand since over a year now. I connected with Hyundai Corporation who were planning to venture into the Indian market and were on the lookout for a partner. Post initial discussions, they agreed to offer the Indian entity brand licence and together we’ll be launching Hyundai branded electronics and appliances in India,” Dhoot, who is the CEO of Hyundai Electronics India.

While Hyundai Corp will be responsible for quality control, research and development (R&D), product selection and market research, the India unit will focus on marketing, distribution, after-sales service and other related activities. “The ownership of the India unit is with me and the understanding with Hyundai Corporation in the brand licensing agreement is that we will market and distribute all of Hyundai’s electronics and appliances. This includes television, refrigerator, washing machines, air conditioners, kitchen appliances and personal care products like shavers, trimmers, blow dryers, etc,” said Dhoot.

Dhoot said the new India unit will bring a lot of R&D and product differentiation to the table. “We are targeting 3% market share in every state that we are going to be present in, in the first year of operations. This will be across television, refrigerator, washing machines and air conditioner products,” he said.

Catering to the mid and upper segment of consumers, the products will be high on features and advanced technology. The pricing strategy adopted by the company will position Hyundai along the lines of LG, Samsung, Panasonic and Sony, among others, he said.

“All the existing re-entrants are mainly playing the pricing game. Our pricing strategy will be in line with the market positioning and the competitive set. In the initial stages, we will adopt a slightly competitive pricing, but will be at par with them in 15 months or so. We will focus on product innovations and feature-rich offerings. For instance, the television (TV) we will launch will have artificial intelligence (AI) with the ability to control any set-top box, internet of things (IoT)-enabled features, control through voice or mobile phone and so on,” he said.

Over the last few years, many defunct consumer electronics brands such as BPL, Thomson, Akai, Sharp and Philips have re-entered the India market. In fact, the segment has become crowded with international and Indian – national/ regional brands vying for a share of the Indian appliance and consumer electronics (ACE) market.

According to India Brand Equity Foundation (IBEF), ACE market reached Rs 2.05 lakh crore in 2017 and is expected to increase at a 9% compounded annual growth rate (CAGR) to reach Rs 3.15 lakh crore in 2022.

Adopting the start-up approach, the India unit currently houses a lean team of 75 employees across functional areas and does not intend to set up manufacturing facilities for the products going forward. It has outsourced production to third-party manufacturers in the country.

“We have already started production in Maharashtra and Uttarakhand/ Uttar Pradesh. The categories being offered currently include television, refrigerator, washing machines and air conditioners. By the end of January, we will be present in towns and cities across five states viz. West Bengal, Maharashtra, Uttar Pradesh, Rajasthan and Madhya Pradesh, that constitute 40% of India,” Dhoot said, adding that the other product categories will be introduced gradually on a quarterly basis and the complete range within 12-15 months when the company will cover 80% of the India market in terms of distribution.

Interestingly, Dhoot will be banking on distributor partners to make Hyundai branded products available across a few thousand retail outlets in the five states. The company has already on board 1,800 so far and another 1,100 will get added over the coming months. The retailing strategy comprises partnering with strong regional chains across various states to sell the products.

“For instance in West Bengal, we are with Khosla Electronics, while it’s Naveen Electronics in the Delhi market. For the Mumbai market, we are going with a distribution house called Jumbo with over 150 counters across the city. The reason for going with these players is that they have a much better market share. We will also be selling through a lot of standalone stores across the country to ensure maximum distribution reach. We will also not sell online mainly owing to discounting issues on that channel,” Dhoot said, adding that over 300 franchisees have been appointed to offer after-sales services for the Hyundai product range.