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Decoding Xiaomi’s 2016 game plan in India

17-March-2016
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Decoding Xiaomi’s 2016 game plan in India

India is among the top markets for Xiaomi right now with the Chinese smartphone company planning to set up two manufacturing plants in the country and launch more devices this year. Xiaomi’s India plan includes manufacturing of handset peripherals and components. Moreover, it is ramping up its presence in one of Asia Pacific’s fastest growing smartphone markets and is looking to set up single-brand retail stores in the next few weeks.

Xiaomi’s latest product Mi5 is scheduled to release in April and will be priced between Rs 20,000 and Rs 27,000.  Early this month the company launched Redmi Note 3 priced at Rs 9,999 on an exclusive online partnership with Amazon in the initial weeks. However, the phone will be available on other platforms soon after, including offline, a move that doesn’t come as a surprise with the company focusing on expanding its footprint in India.

Special interest in India

Xiaomi’s president Bin Lin’s interest in India is not unassuming or incidental as India is one of the largest markets for Xiaomi globally after China. Also, he is betting on India’s e-commerce boom to help offset slowing sales at home. He expects to sell around 140 million devices in 2016 in India compared to about 100 million last year. Having received personal investment from Ratan Tata, Xiaomi is striving to become a local player in India. The company claims to be growing at 40-45% on an annualised basis in India.

Localisation strategy

Looking back, the company entered India in July 2014 with its product Mi 3 and sold 20,000 units through two flash sales on Flipkart followed by the sale of Redmi and Redmi Note.

It started local manufacturing after a year and partnered with arguably the world’s largest contract manufacturer—Foxconn, which makes 75% of the company's phones at its plant in Andhra Pradesh.

2015 was a quiet year for the company, last valued at $45 billion, as its only major launch was Mi4i (followed by upgraded and locally manufactured phones like Redmi 2 Prime and Redmi Note 4G Prime) which led it to drop out of the top five. Moreover, it had to reduce its sales targets and according to the new data released by International Data Corporation (IDC) for Q4 2015, Apple overtook Xiaomi with a market share of 4.6 percent while the latter captured 3.5 percent share. 

As a result Xiaomi is making up for it now with its aggressive manufacturing-based expansion in India. The company has ventured into offline retail in India by partnering with The Mobile Store and Redington. It’s also planning to take stakes in local companies as it targets growth in India’s fast growing mobile market.

Xiaomi is also expanding its product portfolio and is expected to launch its televisions and air purifiers in India this year.

Marketing strategy for India

When it comes to marketing, Xiaomi has largely relied on its online channels than the traditional marketing methods allowing it to sell its products at a better price than its competitors.

For India it had to tweak its strategy, since internet proliferation here is at only 19%, according to a report from Internet Live Stats. So last year the company released its first print ad in India.

Local competition

Xiaomi’s competitors in India are home-grown Micromax, Intex and Lava, which are launching lower-priced smartphones. China’s Lenovo has been particularly aggressive at cutting prices in India, according to research firm Canalys. It also faces heat from other Chinese players like Vivo, Huawei, Gionee and Oppo, which are expanding rapidly in the Indian market. Even the top-seller Samsung is taking note of this intense competition and rolling out an expanded portfolio.

Xiaomi is often described as China's answer to Apple and the brand is focusing on consolidating its position in the Indian market. From its recent moves, there is a possibility of 2016 favouring it. 

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