China’s Xiaomi branches out beyond smartphones to crack Indian market

The Beijing-based tech giant plans to roll out 102 different products to Indian customers through its Mi Home stores

PUBLISHED : Tuesday, 25 April, 2017, 8:00pm
UPDATED : Tuesday, 25 April, 2017, 11:06pm

Chinese technology giant Xiaomi, best known for making smartphones and once hailed as an iPhone slayer, has decided the key to breaking the Indian market lies in a rather different product: the air purifier.

“We have studied the demands of Indian customers, taking their living environment, preferences and consumption power into consideration. The air purifier is the product for us to further establish ourselves in India,” said Eugene Chan, regional manager of Mi Home, Xiaomi’s retail outlet chain.

The air purifier is the product for us to further establish ourselves in India
Eugene Chan, regional manager, Mi Home

The Beijing-based firm is betting big on a bricks-and-mortar strategy to expand its presence in India, a country viewed by tech companies around the world as the next big internet market after China.

Another part of the growth strategy is to branch out into making and selling products besides smartphones in an effort to rejuvenate the brand as an “everything store” in the South Asian country.

With its first self-operated retail store set to open in Bangalore next month, Xiaomi plans to open five to 10 more offline stores under the Mi Home brand in India this year, selling products ranging from smartphones and fitness trackers to speakers and robot vacuum cleaners – and, of course, air purifiers.

The plan is likely to include manufacturing some of the items locally to keep costs down.

“We are considering producing air purifiers as well as other home appliance products in India locally to make sure that our products are still at affordable prices even sold offline in overseas countries,” said Chan, who is in charge of Mi Home’s expansion in South China and foreign markets.

Xiaomi bets on Mi 6 smartphone to regain its mojo in China

India, the fastest growing smartphone market in the world, has attracted a number of Chinese manufacturers, such as Huawei Technologies and Lenovo, as their sales at home stagnate. Xiaomi – one of the world’s most valuable companies in 2014, estimated to be worth US$45 billion – has recently announced plans to set up a second smartphone factory in India.

Once compared to Apple for its sleek smartphones and dominance in China’s market, Xiaomi’s founder and CEO Lei Jun has recently sought to revamp the company into something more like US warehouse retailer Costco Wholesale, which sells everything from wine and cereal to diamond rings.

He has halted the company’s online-only sales strategy, which originally catapulted Xiaomi to the top, and announced the goal of opening 1,000 Mi Home retail outlets in China in the next three years. Lei is aiming for sales from these stores to top 70 billion yuan annually within five years.

The company currently operates 68 Mi Home stores in locations including Hong Kong and Taiwan.

Xiaomi targets 10bn yuan revenue from 1,000 new offline stores

Xiaomi didn’t reveal the size of its investment in its physical expansion in India. But Chan said the offline strategy is good for both sales and marketing there.

“We hope to bring 102 different kinds of products made by Xiaomi and its partners to Indian customers via Mi Home,” he said.

In a recent interview with Blomberg, Lei said he expected to double Xiaomi’s revenue in India to US$2 billion in 2017.

“The cost of offline expansion is much higher than purely selling products online,” said IDC China’s research manager Jin Di. “But Xiaomi needs to expand its product portfolio in India because the profit margin on smartphones is quite thin due to fierce competition. Home appliances, such as air purifiers, have much better margin than smartphones.”

Xiaomi’s smartphone shipments in India grew 15.3 per cent in the fourth quarter of 2016, beating the industry’s 5.2 per cent, according IDC.