Founded in 2010 in China, Xiaomi entered the Indian market in mid 2014. Since then, the company has aggressively launched its value for money smartphones and accessories. As per the latest numbers shared by IDC, Xiaomi has become the third-largest smartphone brand across the top 30 cities in India. In 2016, Xiaomi India passed $1 billion in annual revenue for the first time. The company claims India to be its primary global market and will continue to customize and make products for India.
Donovan Sung, Director of Product Management, International, Xiaomi Global, explains, “We look very carefully at the different market segments in India and what our users are asking for. Redmi note 3 hit two very important price segments of Rs 9,999 and Rs 11,999. We have seen that those price points are extremely important in India and so we focus a lot on these segments. We have changed the price segment under Rs 10,000. And our current strategy for high end products is to launch one flagships product in India every year. India is by far a key market for us, outsider China.”
About 75 per cent of the Xiaomi smartphones sold in India, are made in India. Under its ‘Mission of innovation’, the company believes that innovations and products should not be restricted to people with lot of money and the products should not be sold at a premium. Sung adds, “We are open about the fact that all our products are sold near cost. That means we have low cost in everything we do – the channel structure. That is why we started selling online. We don’t spend a lot of money on marketing. Even though we are experimenting with TV ads in China as well as in India, offline ads, but we are not splurging on it maybe like some other companies would. We are keeping it very low in single digit percentage of our revenue.”
Besides online, Xiaomi started selling its devices at around 7500 retail points and is looking at expanding its offline reach as well. He further adds, “We expanded in China pretty aggressively and this year will expand in India this year. We have a lot more to share on that. But the way we will do offline in many ways will be similar to the way we do online. It will be a very high efficiency channel for us as we have a very interesting approach for offline, which we have already been trying in China, and we are going to adopt that strategy in India as well”, says Sung.
Earlier this month, Lei Jun, Xiaomi’s chief executive said in a letter to its employees, ‘Our e-commerce strategy has also faced some challenges. E-commerce now makes up just over 10 per cent of overall retail in China, and the online smartphone market only makes up 20 per cent of the overall smartphone market. Xiaomi has great ambitions, and we are not satisfied with just being an e-commerce smartphone brand, so we have to upgrade our retail model, and incorporate offline retail for a new retail strategy.’ The company upgraded its Mi Home outlets into full-fledged retail stores aims open 200 more Mi Home stores in 2017, and open a total of 1,000 stores over the next three years.
Apart from smartphones and accessories, Xiaomi is also looking at expanding its product ecosystem in India. Last year, just before Diwali, Xiaomi launched its air-purifier for the Indian market, which received great response. “We have even started launching our ecosystem products in India. In 2017, we plan to bring many more ecosystem products in India. We have a range of different connected devices – TV, Ninebots, toys, air purifiers, etc. and would seriously consider getting all of these things to India,” says Sung.