According to Bloomberg Quint, India’s famous entrepreneur Ratan Tata acquired a small stake in Xiaomi in April 2015 when the company known as China’s apple was trying to recover lost ground by other Chinese competitors such as OPPO, Vivo, and Huawei. The previous year, Xiaomi Co-founder Lei Jun launched the first smartphone in India and is committed to developing Asia’s third-largest economy.
Both bets have paid off. Xiaomi is now the number one smartphone manufacturer in India and the fourth largest in the world after Samsung, Apple, and Huawei. India is Xiaomi’s largest market outside of China. With its promotion, international sales contributed more than a quarter of Xiaomi’s revenue.
Tarun Pathak, deputy director of market research firm CounterpointResearch, told BloombergQuint that India’s biggest role in reviving Xiaomi was to provide the company with much-needed growth momentum. “From 2015 to 2016, Xiaomi’s market share fell sharply. It was Redmi 3 success in India that made the company back to blood. After that, Redmi 4 helped it regain its momentum and allowed the company to restore its confidence to enter other new markets.”
According to the JPMorgan Chase Report, Xiaomi currently plans to raise up to $10 billion in IPOs, and the company’s valuation is up to $92 billion. This will be the largest IPO in the world since the listing of Alibaba Group in 2014 – that was when Xiaomi started to enter the Indian market.
Xiaomi launched the first smartphone Xiaomi Mi3 in India in July 2014. It uses non-traditional strategies and sells only through online flash sales. As buyers snapped up handsets because the same size and similar specs like the competitors but only half the price, this helped to create a boost.
According to IDC data, Xiaomi was only ranked fifth in the Indian market in about 2016. In the global market, it dropped from third to sixth. The company has difficulty in increasing production capacity as planned and failed to achieve its target of selling 100 million mobile phones in 2015. As the Chinese market has become saturated, OPPO, Viv, and Huawei have taken the lead in the competition.
Xiaomi was also facing pressure from overseas markets such as Brazil and Indonesia to shrink. Lei Jun acknowledged in a letter to employees last year that the company once lost its focus while trying to rapidly expand into new products and new countries. “This is why we must slow down and learn lessons from mistakes.”
However, in the Indian market, the company re-focused on the first purchase of users, according to their needs; customized equipment. One of the initiatives includes the introduction of models with dual SIM slots that allow users to switch from one operator to another.
Lei Jun disclosed to Bloomberg last year that in the first three years of India, Xiaomi invested more than 500 million U.S. dollars. As the Indian sector achieved profitability in the financial year ending in March 2017, the investment finally paid off.
Models such as Xiaomi Mi 3, Redmi 1S, and Redmi Note created tremendous demand. Xiaomi said that the company sold nearly 25 million units in the first three years of landing in India. According to market analysis company Canalys, Xiaomi shipped about 100,000 units in India in the third quarter of 2014, compared with 9 million units in the first quarter of 2018.
Xiaomi currently has six manufacturing plants in the Tamil Nadu, Andhra Pradesh, and Noida areas, of which only three have been added this year.
Pasak said that Xiaomi is replicating its successes and models in India in other markets, such as the Philippines, Vietnam and Thailand markets where the company had stopped expanding. “India’s growth has been a critical moment for Xiaomi,” he said.
At the same time, Xiaomi is transforming in China and expanding beyond smartphones. Its custom Android system MIUI is pre-installed with music, video, and browser applications; it also launched Xiaomi brand scooters, chargers, air purifiers, and travel cases.
In addition, Xiaomi restructured the sales model that was originally only sold online, and save its self from the burden of physical stores.
Surpass Samsung in India
This strategy is also very effective in India. The company also now began to sell through offline stores and launched its own Mi store. “We have built a strong new retail infrastructure for our own products and services…” said Xiaomi in the IPO document. “We will also work with Indian customers through cooperation and investment with local partners such as video content providers. Provide internet services.”
According to data compiled by IDC and Counterpoint, Xiaomi is currently the best-selling smartphone brand in India, leading all local and international competitors including Samsung Electronics. In India’s five best-selling models last year, Xiaomi took three seats.
In terms of sales volume, Xiaomi’s share of the smartphone market in India jumped from 3% in 2014 to 30.3% in the first quarter of 2018. In contrast, the market share of Samsung, OPPO, and vivo in the first quarter was 25.1%, 7.4%, and 6.7%, respectively.
According to documents from the Indian Companies Registry, in the fiscal year ending in March 2017, Xiaomi’s revenue soared by 696% to Rs 8,379.3 crore (about $1.2 billion).
Xiaomi said in the IPO documents that 28% of $17.8 billion in 2017 revenue came from overseas markets. And India is the largest market for Xiaomi outside China.
Radan Tata has invested in more than 20 companies, including Ola, an Indian online car service, Snapdeal, an e-commerce site, and Urban Ladder, a furniture and electricity supplier. In addition to funding, his investment is seen as a sign of trust and confidence.
According to Xiaomi’s IPO document, Tata is the company’s only Indian investor. In 2015, the former head of India’s largest corporate group invested in Xiaomi through RNT Associates International Pte.
According to the IPO document, Tata holds 0.0024% of Xiaomi’s shares. BloombergQuint estimates that his investment at that time was about $1 million. Based on the estimated value of Xiaomi’s more than US$90 billion, the investment will now be worth US$2.1 million, Which has doubled in four years. For Xiaomi, it is fortunate to have Tata support.
Karn Chauhan, an analyst at Counterpoint Research, said that until 2017, Xiaomi had no hard-to-find competitors in India, which allowed it to achieve tremendous growth. “With players like Huawei and Oppo targeting India more aggressively, and Samsung updating its Own product portfolio, all of these are likely to slow down Xiaomi’s growth in India.”
The Biggest challenge now Xiaomi has to Face in India is to ensure that existing users do not Switch to OPPO or Huawei. Chahan said that to the achieve this, the Company must stand out in terms of Design and Cameras to Attract more users and retain existing the Users. ” The pressure of Xiaomi will begin to show in the next three to four quarters,” he said.
After the Vivo Nex and Oppo Find X smartphone now Xiaomi has to come with more innovative design and better specs to maintain its rank.
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