In an exclusive interview with WireX magazine, Jubin Peters, Co-Founder and CEO Qthree Ventures revealed how the OEM is helping brands set up a better footfall in India. Excerpts from the interview:
- What is Qthree ventures? How is it helping brands get better business in India?
Qthree ventures is one of the largest master distributors for large electronic products in India. We had a history where we have represented and sold multiple brands in India in different locations. Mainly the past three years, we were instrumental in bringing up TCL to Indians and they have been doing quite good with us. We contribute a sizable business to TCL in India, we represent them in several key chain stores in India. Apart from TCL, we have recently introduced one more international brand called Treeview from Thailand. We hold the licence to represent Treeview in India and several other countries like Afghanistan, Pakistan, Middle East, European consult European countries and African countries.
- Since Qthree is mostly into manufacturing, what are the categories that you have given a special focus on?
Our first focus category is LED televisions and accessories that complement the TV ecosystem. Second would be air conditioners. So our new plan which is getting enhanced will have a capacity of six lakh air conditioners in India.
We are also not intending to be sole manufacturers but when we open up our appliance path, we are looking at participation and association from other manufacturers where we end up doing a lineup- that’s how developed countries work abroad. Nobody does the entire thing on their own. They have a collective cooperation between them; functions are divided.
- The partnership with Abaj, where you are jointly investing around Rs 1000 Cr is expected to manufacture TVs running in Lakhs. What do you intend to achieve with the tech park?
The Abaj Tech Park, based at Ahmedabad is having a capacity of six lakh TV production as of now. The park is made with state of the art machinery facilities, 10 k cleanroom, decent R&D infrastructure with good manpower and the facility is already of a global standard. That was when we started with the first phase of manufacturing. Recently, we started the second phase which was inaugurated by the Chief Minister of Gujarat. With phase two, we aim to produce 90 lakh televisions and six lakh air conditioners. The whole COVID scenario has shown us how the industry is dependent on foreign sources for supply and in their absence, the entire industry witnessed a gap. We are taking a step towards ridding India of foreign dependency.
- Since you are active in the seller and distribution space, can you please comment on some emerging consumer trends that you have witnessed?
In terms of Television sets, post Covid has accelerated the sales of Electronics, especially home consumption based electronics products. Home Entertainment products like televisions, and refrigerators and dishwashers, mobile and tablets, everything is on a rise in terms of demand, because the consumption and the lifestyle pattern of people have changed. In TVs, I keep saying there are three important trends that we find- one small TV becoming big. Second, non-smart TVs are becoming smart. Third, more televisions per home. Everybody is now used to smarter content. So they all want to look at smart televisions. Even the Ott platforms such as Netflix and Prime Video have grown up in a very big way.Even the regional OTT platforms have reported a surge in user base. So there is a huge digitization happening in India, even in the rural and semi rural areas. These are all the trends that we are finding, the old idiot box is now turning out to be a box of knowledge. In certain places, it’s even replacing mobiles and tablets because people want bigger screens.
- With Qthree, what are your goals? Any new market that Qthree ventures is planning to explore?
Our intent is to cater to the customer demands in all the segments but cater it with a lot of economic efficiency. If you look into the brands that we deal with, we are not dealing with any expensive brand. We’re not creating any out of the box technology and overcharging a customer. Qthree doesn’t believe in marketing gimmicks. We are looking at providing a cheaper solution to our partners. Our goal has always been to provide great quality at a value for money price point. Same is true for the brands we partner with. If you see our latest association with Treeview, the tagline itself is powered by honesty. We are giving them honest prices, honest technology and honest service. These are the three important pillars of our industry and we want to build on that. There is a huge demand for TV sets in our country. Of course there are segments for luxury users, semi-luxury, all of which will continue to grow. But there’s a huge population that is waking up to be the first time users. The budget segment still remains the sweet spot we want to target. We want to play our part in driving India’s digital penetration and cater to the rising demand.
- How do you see the Government’s latest push towards making India a manufacturing hub. How do you see the new PLI schemes affecting the entire industry and your business?
It has indeed become very positive for us. A couple of important decisions by the government has made it very favourable for OEM like us. First off, the government has banned the import of completely built television units. They have completely banned the import of air conditioners as well. In India, the majority of the air conditioning that you see has been imported from Vietnam and China. So, with the ban in place, brands want a manufacturer that can not only solve for production but solve for components as well. Currently, in Electronics, the biggest problem is we are still dependent on foreign imports for components. 90-95% components are sourced from outside. It’s not easy to replace the core components and creating your own can be tedious. The industry is very capital intensive and requires time for development. What the government has done is they have increased duties for important rights, they put penalties for substandard products, they restricted import of substandard products, there is a huge check on products coming into India. So all this has made ethical manufacturers to have a decent price and then reinvest that money into more and more facilities.
The policies have also given us courage to showcase our products on a global level. Now, India is emerging as a global manufacturing hub. Big brands are looking to invest in manufacturing in India. With the investment, India will gain the much needed technical know-how of the industry as well. I must say the journey is well-begun. But well-begun is only half done. Maybe in the coming 8-10 years, India will be the best place to manufacture electronics.
- There’s a lot of debate around whether to follow online channels for sales or be offline. So we have seen that Qthree is mainly very strong in offline sales. With such a strong distribution network, are you planning to explore the online mode of sales as well?
It’s a very, very big industry and getting into a new space requires smart strategies. Since ours is a brand new company, we will have collaborations with online sales channels. We don’t have plans to be in the online sale predominantly but follow an online mode for customer experience and have a symbolic presence. We will be an omnichannel brand in the coming years with a significant portion of our sales still coming from offline channels.
- How is Qthree doing in terms of revenue? How was business during lockdown?
So Qthree is looking at close to Rs. 1000 Crores of business in the coming year. We did a little over 600 crores last year. But that was without the factory project. And we didn’t account for it last year but this year. But this year, we have already completed 300 crores in the last five months. We are facing a huge stock crunch due to the gap in the supply chain but we are still hopeful of doing a good business by the end of the fiscal year.
- How is Qthree managing with the stock crunch? When do you see this whole inventory crisis getting over?
The industry is facing a huge stock crisis which started with the lockdowns due to the pandemic. The entire supply chain was disrupted with factories getting shut and people losing their jobs. We have witnessed a drop of almost 30% in terms of production of TV sets. There is a shortage of components as well. The demand is getting higher day by day and we are not able to meet the numbers due to the supply limitations. However, I believe in a period of six months to a year, the factories will be well-adapted towards the new normal with production taking off.
- What about manufacturing with Qthree? Are you dependent on foreign imports for your component needs as well?
Yes, of course. We source important components from countries like China, Taiwan and Korea. Most of the companies from Taiwan and Korea have their headquarters in China. Although there is a certain amount of localisation in terms of packaging material and some softwares, we still have a long way to go if we want to completely replace sourcing from China. Even from the smallest of semiconductors, China dominates the entire industry with their high level of competence. We are looking at establishing state of the art facilities in India but it will take us some time to adapt to the new ecosystem. The government is slowly realising the true potential held by the electronics industry and has given huge confidence to mediocre, common people like me, who will now invest in the sector.
- You mentioned Qthree’s partnership with TCL and Treeview. Any new company that you are planning to onboard with your brand?
We have a good partnership with TCL and Treeview and we are in a very progressive discussion with two new brands. We will be announcing the new partnership by January next year. We are also open to collaborate with other brands and be there licensee in India. Qthree is looking to be the manufacturers for a consortium of brands.
- What about sales during the recently concluded festive period? How did your partner brands perform?
Sales have been good for TCL and Treeview. As i said before, we have seen an increase in demand, but because of the stock crunch, we are not able to cater to the rising demand. Whatever inventory we had, we pushed them through our marketing schemes and got good traction from the consumers. Hopefully, the stock crunch can be resolved soon and then we can resume our full-fledged operations.