In eight years, Xiaomi has grown from another phone maker to taking the electronic and mobile world by a
storm from revenues there to exceed $2 billion for 2017— doubling from last year. Now they have added Smart TV’s to Ecosystem accessories to its wide offerings
The e-commerce boom has sparked an unlikely telecommunication revolution: Launching mobile handsets in a flash sale is like digging the gold mines, and Xiaomi is sitting on the mother lode. The Chinese phone maker Xiaomi was founded in 2010 by serial entrepreneur Lei Jun based on the vision “innovation for everyone”.
India has grown to be the second-largest smartphone base after China, though if we go by the data, India has only
300 million users against China’s 710 million. The Chinese mobile market is said to be saturating these days and, hence many Chinese players are more inclined towards the growth percentages of the Indian sub-continent.
With the view to increase the accessibility of high-quality products built with cuttingedge technology, Xiaomi
creates remarkable hardware, software, and Internet services for Mi fans. The brands’ focus has always been on incorporating the feedback that they receive directly from the users of Mi and Redmi smartphones, Mi TVs and
set-top boxes, Mi routers, and Mi Ecosystem products including smart home products, wearable’s and other accessories.
With a 41% market share in the smart wearable device market, Chinese electronics company Xiaomi dominates the
segment in India, according to a market report by International Data Corporation (IDC). Xiaomi’s Mi band 3 fitness tracker, which was launched in India at the end of September, has quickly become India’s most significant selling smart wearable product, the report said.
The research firm also pointed out that offline shipments accounted for 36.2% of the overall wearable market in India during the quarter, up from 24.3% share in the previous quarter. IDC said that offline shipments are expected to go up in the coming quarters. New brands like Fossil, Titan from India have primarily focused their sales via offline retail channels, while even online brands like Xiaomi and GOQii are also increasingly focusing on offline retail to increase their presence and to add new customers.
“The newly launched Mi band 3 became the most shipped wearable product ever in the history of wearables in India,” the IDC report said. In the third quarter of 2018, Xiaomi maintained its leadership in the market for the 5th consecutive quarter with a 41% market share.
With a presence in over 30 countries and regions, Xiaomi is expanding its footprint across the world to become a global brand. In a recent interview by Mr Manu Kumar Jain, 36, head Xiaomi India & global vice president was heard quoting “We’ve been able to bring high-end, high-quality products and make them affordable. Phones
with similar specs—for the price ranges that we offer—will cost double with a competitor.”
Xiaomi has now announced its third manufacturing plant in India and the first facility only for power banks. This manufacturing plant is in partnership with Hipad Technology spread across 2.3 lakh square feet. With the
timing of this announcement Xiaomi is also playing a more significant part for one of the most important initiatives of the government – ‘Make in India’. Right from a huge start to now, Xiaomi has had a smooth ride in India. Xiaomi is now the second largest smartphone vendor in India and IDC has ranked Xiaomi India as the number one smartphone brand in India in Q3 2017. Closely held Xiaomi may still sell three times as many phones in China, but India is its best hope for gains that might, at last, unlock its IPO opportunity.
The company was founded by eight partners in the year 2010 and was funded by a Singapore based investment group called Temasek Holdings and Chinese venture capitalists called IDG Capital along with Qiming Venture Partners. They were one of the first companies that were endorsed by core mobile companies, Qualcomm. Xiaomi continues to use their processors for their devices even today. One of the first devices that came out of Xiaomi was Mi2. This was the first device that featured the revolutionary and famous Qualcomm Snapdragon chip. The device sold close to 10 million units within the first 11 months of its inception, thus allowing Xiaomi to gain a foothold in markets such as Australia, United States, Europe and New Zealand.
The brand also made sure that they were in pace with the government initiatives led by the government of the country of operation. With Make In India being Indian Prime Minister, Narendra Modi’s growth plan for the nation, Xiaomi took the front seat in joining hands for the same. Riding high on the success and the impetus from ‘make in
India’, the Chinese technology firm is setting up of three more smartphone plants in India. It also announced setting up of its first surface mount technology plant for local manufacturing of printed circuit board assembly units in Sriperumbudur in Tamil Nadu, in partnership with Foxconn. The company wants its global smartphone component
makers to set up base in India, in what is likely to bring as much as $2.5 billion of investment while creating 50,000 jobs.
RULING THE MARKET SHARE
Xiaomi took China by storm with its $100 to $300 phones. Online selling cut costs and reached customers directly. Xiaomi has been one of the niche brands which have extensively explored the online domain. As the brand
entered the Indian market, it found that 70 per cent of the mobile market was in stores. Following the league, Xiaomi had set up 600 service centres, joined hands with 650 retailers and opened seven Mi Home centres. In a recent advancement in the same fashion, the brand tied up with Kishore Biyani’s Future Retail to sell its two most
successful models at Big Bazaar outlets starting from the festive quarter.
“Through Mi stores, we have exclusive Xiaomi outlets targeting rural India, which is tier-3 markets and beyond. Recently, in a single day, we launched 500 stores in rural markets across the country,” Xiaomi India chief operating officer Muralikrishnan B was quoted in an interview.
Even in the China market, Xiaomi has 200 stores and is looking forward to adding 200 more to his kitty by the end of 2020. This initiative has even shown results, as the offline sales in China grew significantly in 2017, and in the second quarter, Xiaomi overtook Apple as the fourth largest phone shipper in China.
As per the latest interview of Manu Kumar Jain, the broad aspiration of Lei Jun is that he would like to invest in about 100 companies in India, give or take, collectively becoming a strong portfolio of mobile tech and services businesses over the next five years. If you think about it, 100 companies and a billion dollars mean an average of $10
million per company, which makes it a realistic aspiration.
India is an exceptionally important market in Xiaomi’s expansion plan and the brand now aims to expand the market share by huge numbers in the country in next couple of years. In conversation with Anuj Sharma, Chief Marketing Officer, Xiaomi India, we talk aboutthe how the brand has successfully marketed itself in the country.
India has become the largest growing market for Xiaomi. What makes you so upbeat about the Indian market?
We started in India as an online only brand in 2014. At the time, the smartphone market was filled with more than 300 smartphone brands who were heavily offline based. We disrupted the smartphone market with our online approach strategy and unconventional marketing measures driven by our Mi Fans’ word of mouth promotion,
and social media engagement techniques.
Today we are the no. 1 smartphone brand in the country, with a presence in both online and offline markets. We have also grown to become the no. 1 smart TV brand in India this year. We have been able to do so due to our brand philosophy that drives us – Innovation for all. We believe in offering innovative products of high quality and best specs to all at truly honest pricing. Through Xiaomi, consumers all over India can now proudly own and enjoy the latest technology without having to shell out exorbitant amounts of money. We always believe in acting like a local company is any market we operate in, with global standard.
In India as well, our commitment towards the country regarding building a service network, manufacturing capabilities and sales network. We have also received immense love from Mi Fans in India who have helped us achieve the current position, contributing towards the company’s success. Also, we have also implemented
several unconventional marketing techniques ranging from our brand marketing initiatives like Naya Note and Kiska Bajaa inspired from real-life, local insights; to our Guinness World Record achievement of building the largest light mosaic (logo) depicting our Mi logo made out of 9,690 light bulbs. The Guinness World Record achievement commemorated the love and support of all our Mi Fans who have led us to succeed. All these factors help us being so upbeat and excited about the Indian market and hence, all our innovations are always centered around the requirements of Mi Fans.
Measuring an investment’s success is a challenge in this space. How do you create a credible way to measure impact?
With most businesses, one can measure the impact of these businesses by the number of consumer lives that have positively been impacted by them. It is both thrilling and humbling to find that our products have been the reason for many consumers in India to access smart technology and enjoy a smarter lifestyle easily. In Q3 alone, Xiaomi
shipped a whopping 11.7 million smartphones while becoming the no.1 smartphone brand for the fifth quarter again (IDC Q3 report).
The volumes themselves are a testament of the growing love for the brand in India. Not just that, even people who work in our manufacturing plants are getting impacted by their association with Xiaomi. One such case study is of Kamala Kumari is available on youtube. This year, Xiaomi marked over 15 million monthly active Mi Fans in India, which again highlights the growing rate of success the brand has achieved in India so far.
In addition, our recently launched marketing campaign – Kiska Bajaa was also inspired by local insights which showcased how our signature ringtone resonates with audience of all backgrounds, highlighting the prominent presence of the brand across India. This has been possible because we as a brand continue to prioritize the needs of our Mi Fans and consumers and ensure that we sincerely design and deliver incredible products at truly honest pricing to all.
What kind of returns from the Indian sub-continent are you looking at?
India is an essential market for Xiaomi, and we have grown exponentially in the country in just 4 years of operations.
We started in 2014 as a small player. Today Xiaomi is the number one smartphone brand in the country with a market share of 27.3% (IDC, Q2 2018). We continue to dominate the market for 5 consecutive quarters. Currently, we are present on online platforms such as Mi.com, Amazon, Flipkart and multiple offline channels as well.
We have expanded our offline reach and, today we have more than 50 Mi Homes, 500+ Mi stores and 4000+ preferred partner stores. Although the online segment has grown immensely in India, nearly 70% of the Indian market is still heavily offline based. We aim to further expand our offline footprint in the country, with a presence in not just the metro cities, but also across tier 2, tier 3 and below cities.
In addition, we will continue to focus on offering a truly innovative product portfolio to our consumers. Xiaomi is more than just a smartphone brand, and therefore, you will find diverse range offerings from us which include smart ecosystem products, as well as internet services (e.g. MIUI, Mi Music, Mi Video, etc.).
How does the brand build harmony between Xiaomi’s purpose and India’s goals?
Since the time it was founded by Lei Jun in 2010, Xiaomi’s aim has always been to provide innovative technology to all, at truly honest pricing. And this philosophy applies entirely to India too. Xiaomi in India is a truly Indian company at heart, wherein it is run by local talent, and products, as well as operations, are localized to best fit the needs of Mi Fans and consumers in India. India as a market has several consumers who are pretty informed with technology updates, and are also keen to seek the best experience at a value-for-money price. This helps us strike a chord because through Xiaomi, consumers can access great products which are high quality, innovative yet available
at honest pricing.
Published in the January 2019 issue of Pitch Magazine