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Xiaomi's Doubling It's Bet On India

27 Apr, 2017
Xiaomi Billionaire CEO Is Doubling Smartphone Bet on India

Xiaomi, best known for catapulting it’s way into unforeseen success in the smartphone world, and it’s amazingly low prices, experienced rampant growth not just on an Indian scale but in every country it entered.

When Hugo Barra took over the steering wheel a few years ago, the brand was an unknown entity, and Barra, along with a young, hungry team made magic happen, bringing the company global repute, and a place at the top-five brands table. The tide was high!

Then in 2016, Xiaomi hit some breakwaters that stemmed it’s high-tide momentum. The company had a tough year, with their global growth and revenue ebbing into a little bit of a slow pool. But it seems like a bet that Barra made on India might be paying off.

The company spent about USD 500 million on India since its debut in 2015. India was also the country where Xiaomi crossed USD 1 billion in sales revenue in a single year, for the first time.

It’s no surprise thus, that Xiaomi’s doubling the bet on the India!

Xiaomi’s co-founder, Lei Jun recently pledged another investment of the same size over the next three to five years. He also added that he expects to double revenue in India this year to USD 2 billion.

So it seems like Jun is letting India hold the key to rejuvenating and reviving the brand after having been eclipsed by local competition here and even in its own home country of China.

We faced many challenges. Many negative reports about us,” Jun said, “But it was never as bad as it was made out to be. We have gone back to healthy growth. We will resume rapid growth in the next two years”.

At a time when the global demand for smartphones seems to have stagnated, India has surprisingly been one of the very few markets that is still moving rapidly. This could be owing to the hunger for more and more connectivity in a country that still has a long way to go in that respect, or to the simple arithmetic of the humoungous population of India and that of the neighbors in the subcontinent, that depend upon it for all sorts of advancements.

Regardless of the reason, what is quite clear is that this market is attracting foreign players who are very effortlessly moving Indian brands like Micromax to the side, with their superior quality and customer focus, not to mention superior devices.

Xiaomi’s devices (like Oppo’s) have got the looks, the feel, and the features and the likes of Micromax, Lava, Karbonn are once again being relegated to a quiet, dark corner of the market where only the very basic customers ever venture.

The country is undoubtedly Xiaomi’s most important foreign market, especially given a brand like Xiaomi would be eaten alive for the patent violations if it even tried to step into the Western markets.

With this latest re-doubling investment, Xiaomi joins the growing list brands manufacturing their devices in India, others being Huawei, Lenovo, Samsung, and very recently Apple.
A large part of this investment, would go towards a second manufacturing plant built with partner Foxconn. This would create 20,000 jobs in the next three years, and as Jun says, will manufacture one new phone per second.
There is also talk of a third production plant in the wind.

In the next two years we want more and more influence in India”, Jun said. “We want to take more risks in India. But we want to take controlled risks”. This would include boosting production closer to projected demand, moving away from its traditional reliance on flash sales to maintain scarcity.

Xiaomi’s bet on India paid off at a time when the global smartphone market seemed to be dipping. It is now expected that the global smartphone market will bounce back from the low it saw in 2016, but however that goes, Xiaomi’s bet on India, counting on the dynamic and growing market, should keep it going – provided the products match up to our ever-increasing expectations!