Xiaomi, billed as the world’s third-largest smartphone manufacturer by IDC, celebrated the launching of its debut Indian made cellphone- the Xiaomi Redmi 2 Prime with fanfare. The dual-SIM, 4G Redmi 2 launched on 10th August 2015 in Visakhapatnam, is the first smartphone from the Xiaomi’s Mi series to be indigenously assembled.
Xiaomi manufacturing in India, learn why
Xiaomi has been operating in India for nearly 17 months and during this period it has sold approximately 30 million handsets, including tablets. As demand for PDAs in China has peaked over the years, India has become the most attractive destination for the major players in the smartphone market. Over 150 million handsets have been sold in the last two years as cut-throat competition has gradually brought down their prices. As per a realistic forecast by IDC (International Data Corp), the market for smartphones is estimated to grow roughly by 40% annually, consistently for the successive five years. In order to reap the benefits offered by the present government through its ‘Make-in India’ programme, Xiaomi is gearing up to manufacture the components locally. Once the infrastructure and congenial prerequisites for producing the same becomes a reality, Xiaomi is expected to stop procuring the parts from abroad.
Xiaomi to Capitalise on Narendra Modi’s ‘Make-in-India’ Policy
The spiralling demand for hi-tech budget handsets in India inspired CEO Lei Jun and Hugo Barra, Xiaomi’s global VP to launch Mi 4 in the country. As part of their make in India program, Xiaomi has set up its first manufacturing plant in Andhra Pradesh. This Chinese electronics and computer hardware behemoth, in partnership with Foxconn of Taiwan, will assemble the Redmi 2 handsets in Sri City, Andhra Pradesh. Company’s decision to set up Xiaomi’s plant in India, Andhra Pradesh comes from a combination of appealing factors including highly skilled technical manpower and emerging leadership keen on development.
Unique Selling Proposition of Xiaomi
Xiaomi, right from day one, had resorted to unique and unconventional marketing techniques to become the world’s third-biggest smartphone seller within a span of six years. The conglomerate has constantly strived to keep prices of its handsets just marginally above their production costs without compromising on quality or performance. Consequently, in order to maximise profits, Xiaomi maintains a minimum selling window of 18 months for a particular model before going for an upgrade. This extended timeframe enables the company to make a windfall as the cost price of components plummets over time with selling price remaining constant. Furthermore, the multinational earns good revenue by promoting compatible gadgets like phablets (smartphone-cum-tablet), MIUI, apps, power banks, and so on. Unlike other smartphone makers, Xiaomi doesn’t have any brick-and-mortar outlet as it vends its products entirely via its online store.
In the coming years, leading smartphone manufacturers will fiercely compete with each other for capturing a sizeable slice of the Indian mobile phone market. Needless to say, Xiaomi will be going all out to not only hold on to its present clientele but also rope in new customers. And Xiaomi, will aim to achieve these twin objectives by judiciously exploiting the incentives offered by the incumbent government including tax sops, and optimally tapping its USPs.