The Next Big Thing

Indian industrialist Ratan Tata buys into Chinese smartphone maker Xiaomi

PUBLISHED : Monday, 27 April, 2015, 9:02am
UPDATED : Monday, 27 April, 2015, 9:17am

Ratan Tata, a former chairman of Indian industrial group Tata Sons, has made a personal investment in smartphone maker Xiaomi, the Chinese company said on Sunday, without disclosing the amount.

This is the first investment by any Indian into Xiaomi, according to the Beijing-based company, and comes as Xiaomi steps up its push into the fast-growing Indian market.

"Mr Tata is one of the most well-respected business leaders in the world. An investment by him is an affirmation of the strategy we have undertaken in India so far," Xiaomi founder and chief executive Lei Jun said in a statement on Xiaomi's India Facebook page.

"This is just the start of an exciting journey, and we are looking forward to bringing more products into India," he said.

Xiaomi entered the Indian market in July last year, seeking to recreate its success in China, where it has become the top smartphone brand. In October, the company said it sold 100,000 of its Redmi 1S phones in India in just 4.2 seconds as part of an online flash sale event.

On Thursday, Xiaomi hosted its first global launch outside of China in the Indian capital New Delhi, unveiling its feature-heavy Mi 4i model that supports six Indian languages and costs 12,999 rupees (US$204).

According to market research firm Canalys, 23 per cent of smartphones sold in India cost less than US$100, while 41 per cent were priced between US$100 and US$200.

The pricing of the latest phone, as well as the US$225 cost of Xiaomi's Mi 3 device in India, is above those of domestic smartphone marker Micromax, which according to Canalys leads the Indian market with a 22 per cent share, but are still far cheaper than Apple, whose iPhone 6 costs upwards of US$780 in the country.

Technology market research firm IDC noted in a separate report earlier this year that migration from feature phones to smartphones in India is accelerating, with smartphones taking a 35 percent share of the total mobile phone market in the last quarter of 2014, a rise of 13 percent from the same period a year earlier.

Tata, a respected business leader who was the chairman of Tata Sons for more than two decades, has previously invested in Indian start-ups, including online retailer Snapdeal. Tata Sons is the holding company of the Tata group, a conglomerate with interests in over 100 businesses, including Tata Motors and Indian Hotels.

Xiaomi did not say if the investment would pave for way for a business tie-up with Tata Group, but it said Tata would act as an advisor to Xiaomi as it tries to grow its business in its second-largest market.

"There cannot be a better mentor than Mr. Tata himself who can help us build a truly Indian company," tweeted Manu Jain, Xiaomi's India head.

It has not all been smooth sailing for Xiaomi on the subcontinent however. In December Swedish telecoms equipment firm Ericsson obtained a court order temporarily halting Xiaomi shipments to India, claiming the Chinese company had not been paying royalties on its patents.

Despite a pending court case, Xiaomi announced plans last month to open 100 stores in India and begin local production in the next 12 to 18 months.