Chinese smartphone maker Xiaomi entered India in 2014. Since then it has launched an array of products including smartphones, speakers, fitness bands and other accessories. But will it build more in India?
Chinese smartphone manufacturer Xiaomi entered India in 2014. Since then it has launched an array of products including smartphones, speakers, fitness bands and other accessories. On Thursday, the company opened its Mi Home store in Bengaluru. Xiaomi’s first store in India, Mi Home Store is an exclusive offline retail store, where it will showcase its products including the Mi and Redmi series of smartphones. According to Xiaomi, it is planning to open 100 similar Mi Home Stores in the country, in the next two years. The next series of Mi Homes will open in Delhi, Mumbai, Hyderabad and Chennai. Meanwhile, Apple could soon reportedly start a trial period of the proposed assembly unit near Bengaluru in partnership with Taiwanese contract manufacturer Wistron. It may not even wait for the government to decide on tax sops which are being sought by the iPhone-maker. With such aggressive strategies, can we expect even Xiaomi to go the same way?
Xiaomi has already set up a second factory in the country in Andhra Pradesh’s Sri City in March. While Xiaomi did not give the exact capacity of the plant, the company claimed it is now manufacturing one phone per second in India. However, this might not be enough given the supply constraints it continues to face here. Most of Xiaomi’s devices are sold out within seconds of becoming available online during the weekly sales. Xiaomi’s plants are operated by Foxconn and they employ over 5,000 people. Xiaomi says 90% of the employees are women. Xiaomi, which had earlier sought an exemption from the mandatory 30% local sourcing norms to set up its own retail outlets in India, has now said it doesn’t need the waiver anymore, department of industrial policy and promotion (DIPP) secretary Ramesh Abhishek said. Xiaomi has written to the DIPP saying it doesn’t need the waiver as it is manufacturing here and will be able to meet the local sourcing norms. The spotlight has been on Xiaomi after Apple’s application for such a waiver was turned down by the finance ministry earlier this month. Another Chinese mobile phone maker, LeEco, has also sought such a waiver.
In the Mi Home Stores, Xiaomi will include ‘Experience Zone’, where the company will also show the customers, products which are not sold in India. Xiaomi feels that it can understand the response of Indian consumers by showcasing those products through its stores. CEO Lei Jun, in January 2017, had informed that Xiaomi crossed $1 billion as revenue in India. With an Indian, Manu Kumar Jain at the helm (Managing Director), and such careful strategies, it would not be far-fetched if Xiaomi finally starts to build its products in India for the year 2016. In 2016, the smartphone manufacturer became the third biggest brand in India in the third quarter, after selling over two million smartphones at an annual growth rate of around 150 percent. Jain had told IANS, “We are present in 20 markets globally but India tops in terms of volume and is also the fastest growing market for us. All eyes are on this market and we will continue to do what we are doing and provide great after sales service and experience for our users.”
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The 7-year-old Xiaomi, for a brief amount of time, was the world’s most valuable startup and had hoped to be China’s equivalent of Apple Inc but later it fell out. With increased competition in China from vendors like Oppo, Vivo and Huawei, and rising popularity in India, speculations have risen about XIaomi’s plans in the country. Once an online-only brand, Xiaomi is moving fast into offline markets to widen their reach to the mass market, addressing consumers in tier II and III cities.
As per International Data Corporation (IDC), Xiaomi Redmi Note 3 was the highest shipped device in the history of online smartphones industry, with more than 2.3 million devices sold in 6 months. The company even said that its brands Redmi 3s and Redmi Note 3 were the top selling devices during the Flipkart’s Big Billion Days and Amazon’s Diwali Shopping Festival.
Research firm Counterpoint has said that smartphone shipments in India have grown by 15 percent to 29 million units in March quarter compared to a year-ago. Top five brands have captured almost 70 percent of the total segment. India is one of the world’s largest and among the fastest growing smartphone markets. Sales have evidently slowed down in mature markets like the US and Europe, smartphone makers like Apple are expanding their presence in the developing markets like India. Interestingly, Samsung continues to lead the Indian market with 26 percent share and it is followed by Xiaomi with 13 per cent, the Counterpoint research said.
India: China 2.0?
A Chinese think-tank Anbound has said that China should take competition from India seriously as the Indian economy may see an explosive growth in the future, raising prospects of it becoming ‘China 2.0’. Referring to various Chinese firms including Huawei, Xiaomi, Oppo and others investing in India, the report said: “in our opinion, if India intentionally creates a competitive situation in front of global investors, it will pose a challenge for China”. The report published in the state-run Global Times today said “just as what happened with China in the past, the changes that are taking place in India may also point to great potential for development” With PM Modi, boosting efforts in clean energy and other investments in solar energy, and World Bank backing, it is possible the Chinese players might want to invest in India, in a big way.