Prices of MI phones could increase over Rupee woes, says Xiaomi

By: | Published: September 7, 2018 4:02 AM

Chinese smartphone maker, Xiaomi said on Thursday that it may increase the prices of some of its smartphones if the rupee stays stable at the current level or depreciates any further.

Xiaomi, Xiaomi smartphonesJain said that when considering pricing, they look into the whole lifetime of the product, which is typically 9-18 months and assume certain dollar rates for them, which are not as high as the current rates.

Chinese smartphone maker, Xiaomi said on Thursday that it may increase the prices of some of its smartphones if the rupee stays stable at the current level or depreciates any further.

Xiaomi, which is currently leading the smartphone market in India with nearly 30% share, expressed concerns over the depreciation of the domestic currency to the US dollar in relation to its profits in the country.

Xiaomi said that while assembly and manufacturing is done locally, which helps in the efficiency of supply chain whose benefit is passed on to the customers, many components are bought in US dollars from other countries like China, Japan and Taiwan. But the money earned through the products is in rupees. They further said that it had based their entire business plan on the rate being in `62-65 range.
“In just six months it has moved to Rs 71 per dollar. We made a declaration before the IPO that we won’t make more than 5% profit margin on any hardware device. But costs have gone up by over 10%. This is putting a huge amount of pressure on our P&L and on other companies in the sector,” said Manu Jain, Vice President, Xiaomi and managing director, Xiaomi India.

Jain said that when considering pricing, they look into the whole lifetime of the product, which is typically 9-18 months and assume certain dollar rates for them, which are not as high as the current rates. Before Xiaomi’s IPO in June, the company had said that they won’t exceed more than 5% profit margin for its hardware products.

“The rate remains in this level or further goes up, we will be forced to revise the pricing especially for products that are under Rs 10,000 because if you make 5 to 4% profit margin the actual dollar profit will be much lower especially in the case of products under Rs 10,000. We are seeing how it goes but if it goes up and stays at the level it is, we will have to revise the prices,” he added.

He didn’t indicate by how much will the prices increase but indicated “it would be by a few hundred rupees” for the products under Rs 10,000.

Xiaomi’s rivals Samsung, Huawei, Vivo didn’t comment on whether the prices of their smartphones will see any change in the current currency environment.

By Aniruddha Ghosh

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