India Xiaomi’s No 1 priority as Chinese firm eyes country’s demand for cheap smartphones

‘India No 1 strategy’ covers design, research, manufacture and supply, CEO tells Indian media

PUBLISHED : Tuesday, 21 November, 2017, 2:05pm
UPDATED : Tuesday, 21 November, 2017, 11:51pm

India has emerged as the top priority for electronics and software maker Xiaomi – even more than the Chinese market – and it is ready to replicate its domestic success there. India supports analogous purchasing power in a similarly sized population of 1.4 billion consumers obsessed with cost-effective electronic gadgets, according to Xiaomi founder and chief executive Lei Jun.

“We have adopted the India No 1 strategy, which includes design, research and development, manufacturing and supply,” Lei told Indian business daily Mint this week. He said India was one of the best performers among its 60 markets in terms of shipment and scale of work, although Xiaomi has never released revenue numbers for the country.

“Even the Chinese [Xiaomi] teams had some opinions as everything was prioritised for India. We became No. 1 because our company is small, so we focus all our energy on India. That’s why we have really supported India on the supply front,” Lei said when asked whether Xiaomi was giving India priority over its home market in China.

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

The company will establish a research centre in Bangalore and will hire more local engineers to build India-specific products that cater to the needs and preferences of local users. Many of these products will not sell in China, and staff members from other markets have been sent to India to support the local team.

Lei said Xiaomi will eventually sell about 200 products to Indian consumers in the next three to four years. The company already offers about 200 products – smartphones to home appliances – in China, but only sells about 20 products in India.

“India is becoming a bigger priority compared to China in certain aspects. For example, research for making India-focused products and supply and stock for product lines sold in India,” a spokesperson said after Lei’s interview with Mint was published.

In October, Xiaomi had already completed its targets of 100 billion yuan (US$15.07 billion) in sales and 70 million smartphone shipments for the year. Lei told Mint the company wanted to ship 100 million handsets next year.

Indians warm to Xiaomi, Vivo, Oppo, pushing Chinese brands to 51 per cent of market

India has become an important market for Chinese smartphone brands as their domestic market is saturated and competition is stiff.

Xiaomi’s smartphone shipments in China expanded by about 57 per cent to 15.7 million units – or a 13.7 per cent share of the market – in the third quarter this year, but it still lags behind Huawei Technologies, Oppo Electronics and Vivo Mobile Communication Device((Dongguan), whose shipments were between 18.9 million and 22.3 million units during the three-month period, while their market shares were between 16.4 per cent and 19.4 per cent, according to an IDC report this month.

But in India, Xiaomi is already a leader. Another report by IDC last week revealed that it along with Samsung had captured 23.5 per cent of the market share in India during the last quarter, and added that Xiaomi almost tripled its smartphone shipments year on year and doubled quarter on quarter during this period.

Lenovo Group, Vivo and Oppo trailed behind Xiaomi and Samsung, owning a market share of 9 per cent, 8.5 per cent and 7.9 per cent in India between July and September, respectively.

Huawei is not a top player in India, as its target markets are China and European countries, where it can generate higher profits from the sale of expensive handsets.

Xiaomi is also planning to invest as much as US$1 billion in 100 start-ups in India over the next five years, after having invested US$4 billion in more than 300 companies in China in the past four years, with an aim of boosting the supply of apps for its smartphones in the country, according to Lei.

“We will basically replicate the most successful ecosystem business model of China in India,” Lei was quoted as saying in Mint, adding that Xiaomi, with its sister investment firm Shunwei Capital, had bought stakes in six Indian internet companies.