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Xiaomi’s Big Bet on India

Having begun its journey in India with a smartphone lineup that, unlike the strategy employed by other Chinese rivals foraying into India, saw a silver lining in the online market back in 2014, Xiaomi has today achieved unflinching success. Today, Xiaomi is the top smartphone vendor in the country’s online market with a 57 per cent share in the first quarter of 2018 while Samsung and the Huawei brand Honor tail behind.

Four years on, Xiaomi sits close to Samsung that once used to reign over the mobile phones market in India with its budget offerings. With a mediocre market share of just 5 per cent in 2015, Xiaomi leapfrogged to 30.3 per cent in the 2018 Q1, as per IDC data. At the helm of the torque that has driven Xiaomi’s sales in India is its India Managing Director and Global Vice President, Manu Kumar Jain.

Jain began his stint at Xiaomi in 2014 and since then has catapulted the company’s growth staggeringly. With an aggressive pricing and reasonably higher set of specifications, Xiaomi smartphones have overwhelmed the market that was once ruled by run-of-the-mill smartphones. While Jain plans to manufacture 100 per cent PCBs in India by September this year – after having already started PCB manufacturing in Tamil Nadu, he is pinning hopes on an addition of as many as 50,000 job opportunities in the smartphone manufacturing sector in India with an added investment of over 15,000 crore rupees from various players. This will not only bring in a huge surge in the employment rate in India but also be a crucial milestone in Xiaomi India’s coming prospects.

Manu Kumar Jain spoke exclusively to FinancialExpress.com on Make in India, and more. Here are edited excerpts from the interview:

What exactly led Xiaomi to begin manufacturing PCBs in India when other companies are still sourcing them from other countries?

Xiaomi as a company is dedicated to the cause of ‘Make in India’ and to further strengthen the local manufacturing capabilities. Recently, we announced the first SMT (Surface Mount Technology) plant dedicated towards local manufacturing of PCBA (Printed Circuit Board Assembly) units in Sriperumbudur, Tamil Nadu, in partnership with Foxconn. It is worth noting that PCBA is one of the most important components of a smartphone, and contributes to nearly 50 per cent of the value of the phone. Our aim is to eventually decrease the overall manufacturing cost by manufacturing these locally.

There has been an exponential increase in local demand and in order to fulfill this growing demand, we took this initiative of manufacturing PCBA units locally. Currently, we are building our PCBA manufacturing capabilities and our goal is to manufacture 100% of the PCBA units in India by the end of September this year.

PCBs require a lot of components to form a single unit and while Xiaomi is assembling PCBs in India, where is it sourcing the components from?

Since Xiaomi is a global company, we have suppliers from around the world who supply components to us in order to manufacture PCBA units in India. To create a strong PCBA manufacturing base in India, we conducted the first ever Global Supplier Investment Summit in India which brought together more than 50 international suppliers and gave them a first-hand experience of the potential opportunities in India. As a result of our efforts with this summit, few of these suppliers are hoping to explore potential opportunities with the Indian government in order to set up manufacturing units in the country. Currently, Xiaomi’s SMT (Surface Mount Technology) plant for manufacturing of PCBA, located in Tamil Nadu is functioning in partnership with Foxconn and we are planning to set up more manufacturing plants across India.

The Redmi Note 5 Pro and Mi TV 4 55-inch recently saw a price hike due to the new import duty regime. Will the PCB assembly in India reverse the pricing?

Since we had to import PCBAs from outside India in order to meet the local demand, the prices of Redmi Note 5 Pro (4GB RAM variant) and the Mi TV 4 55-inch did see a price hike recently. However, we are actively working towards boosting our local PCBA manufacturing base in the country and are hopeful about achieving 100 per cent success by Q3 2018.

The government’s Make in India programme has been proactive for manufacturing in India. How has that helped Xiaomi?

India is the most important and largest market for Xiaomi outside China and it will continue to be a priority market for Xiaomi. The company has extensively supported the Make in India initiative of the government and is truly committed to the Indian market. We announced our first manufacturing facility in India in January 2015, even before the government had announced tax benefits and other such benefits to manufacturing smartphones locally. Tax benefits by the government were announced in March 2015.

We have already invested millions of US dollars in manufacturing, R&D warehouses, logistics and customer care in India. Today, Xiaomi has a total of 6 smartphone manufacturing plants, 4 located in Sri City, Andhra Pradesh, 1 located in Sriperumbudur, Tamil Nadu and 1 in Noida, Uttar Pradesh. Five of the six smartphone plants are in partnership with Foxconn of which 4 are in Sri City, Andhra Pradesh and 1 in Sriperumbudur, Tamil Nadu. The smartphone manufacturing plants have a capacity of 2 smartphone/second capacity during operational hours. Currently, over 95 per cent of Xiaomi smartphones sold in India is made in India, thereby boosting indigenous manufacturing of smartphones and its components which is one of Xiaomi’s priorities.

In April 2018, Xiaomi organised the first ever Global Supplier Investment Summit in India with the objective of educating global component suppliers about India’s smartphone industry and encouraging them to establish a local base in the country. This initiative is expected to potentially bring in an added investment of over 15,000 crore rupees ($2.5 billion) and create as many as 50,000 job opportunities in India. Xiaomi is focusing heavily on transforming India into a global manufacturing hub in line with the Make in India initiative.

Xiaomi has had an outstanding run in the Indian smartphone market so far. What has been the most contributing factor to Xiaomi’s growth in terms of manufacturing in India?

Xiaomi has witnessed exponential growth in the Indian market since its inception in 2014. The company is one of the fastest growing smartphone companies in India, and since Q3 of 2017, we have established as the number 1 smartphone brand in the market (as per IDC report). Xiaomi also enjoys a healthy market leadership across all of its product categories in the online segment among partner platforms. Mi.com, which is the company’s own e-commerce platform has been ranked the 3rd largest e-commerce portal with regard to smartphones in India (Q1 2018, Counterpoint report).

We have a strong India focused business model for online and offline both, including an extensive local manufacturing presence and a robust after sales network in India. We entered India as an online-only company and gradually stepped into the offline space via retail partners and by opening Xiaomi exclusive retail stores called Mi Homes. We hold ourselves to very high standards, no matter whether it’s in product quality, user experience or after-sales service. However, one element which strings it all together is our Mi Fans. Mi Fans are the core of our marketing approach which is driven primarily via social networks and communities. Moreover, our team of 400+ smart and efficient employees have significantly contributed to this journey and continue to help us design and innovate unique products for future offerings. – Financial Express

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