Xiaomi clings to Indian smartphone market despite challenges as China growth slows
- Xiaomi is expected to hold on to its Indian smartphone business despite ongoing investigations by local authorities
- The Chinese smartphone maker has been quick to stamp out suggestions that it may move its operations out of India to Pakistan
Chinese smartphone giant Xiaomi is likely to bite the bullet and keep its operations running in India despite mounting regulatory headwinds and recent rumours that it may pull out of the market, according to analysts, as sales soften in China.
In the latest chapter of Xiaomi’s ongoing legal saga in the South Asian nation, the High Court of Karnataka in southwestern India earlier this month rejected the firm’s fresh appeal seeking interim relief from a court order to seize US$676 million worth of its assets, a move that Xiaomi said had “effectively halted” its local operations.
Despite the legal challenges, Xiaomi has been quick to stamp out any suggestion that it may move its operations out of India to Pakistan. In a tweet on October 7, the company called such allegations “completely false and baseless” while reaffirming its “Made in India” commitment.
Xiaomi is “deeply invested in manufacturing in India”, where the company has at least six factories, said Rajeeve Nair, a senior analyst at Strategy Analytics. The Chinese company also has a “strong portfolio” of mid- and entry-level mobile phones in the Indian market that it cannot easily give up, he said.
In the second quarter, Xiaomi shipped over 7.1 million handsets in the world’s second-largest smartphone market, commanding a market-leading 20 per cent share, according to the consultancy.
As the market leader, Xiaomi has very good brand positioning in India, according to Ashutosh Sharma, a research director at market consultancy Forrester.
But “Chinese firms need to know that they’re operating in an environment that is not going to be very friendly, both from the Indian government’s and consumers’ standpoint,” Sharma said.