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Xiaomi

Xiaomi banks on store sales in India to maintain edge in its biggest global market for smartphones

PUBLISHED : Friday, 08 September, 2017, 8:00am
UPDATED : Friday, 08 September, 2017, 3:01pm

Chinese smartphone maker Xiaomi may have lost market share back home, but the company is confident its entry into the offline spacecan help maintain its strong position in India, its largest international market.

Within three years of its launch in India, Xiaomi already has five Mi Home stores across the country selling products such as its smartphones, earphones and Wi-fi routers, and plans to expand the number to 100 by 2019.

This relatively early entry into the offline retail network in India is will “benefit Xiaomi in the long-term”, said Manu Kumar Jain, Xiaomi India’s managing director and vice-president for Xiaomi Global.

Jain brushed off concerns that Xiaomi could eventually face the same fate it had in China – losing market share to other Chinese rivals with strong offline networks such as Oppo and Vivo.

In China, Oppo and Vivo’s strong retail presence in third and fourth-tier cities helped boost sales and gave the companies an edge over Xiaomi, which entered the offline retail space only last year. Previously, the Beijing-based company operated solely on an online-only model to keep operations lean.

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“At the beginning, there will be significant growth in online sales but this will eventually start to plateau,” Jain said in an interview with the South China Morning Post. Currently, about 30 per cent of smartphones sold have been bought online, compared to a mere 10 per cent in 2014.

“While online sales are still growing, we need to build a strong sustainable offline business,” he added. “In China, Xiaomi started building offline after six years … In India we have opened stores last year [after less than three years of operation.]”

Since its launch in the Indian market in July 2014, Xiaomi is now the No 2 smartphone brand in the country with 17 per cent market share and has shipped over 25 million devices. Samsung takes the top spot with 24 per cent of the Indian market.

This two-pronged approach of both online and offline sales can help Xiaomi capture more of the smartphone market in India, which still has enormous potential to grow, Jain said.

Over 85 per cent of its users are young, aged between 18 and 34, and are either college students or young professionals working in their first jobs. These users tend to be strong word of mouth advocates for Xiaomi, advising their older, less tech-savvy relatives to buy a Xiaomi device as their first smartphone, he added.

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According to a recent Newzoo report, smartphone penetration in India stood at 22.4 per cent in 2017, compared to 51.7 per cent in China. The average smartphone price in India was US$155 in the first quarter of 2017, according to IDC data, which is over 50 per cent less than China’s US$362 as the smartphone market matures and Chinese consumers seek higher-end, replacement handsets.

“250 million mobile phones are sold in India every year … [and less than] half are smartphones, the rest are feature phones,” Jain said, adding that there is still plenty of opportunity to convert these feature phone users to smartphone users.

The company has also teamed up with 1,400 Xiaomi partner stores across the country, both in metropolitan cities and lower-tier cities, which sell the company’s products to consumers who prefer buying offline.