Xiaomi has set up a second factory in Andhra Pradesh’s Sri City, the company announced on the sidelines of its Redmi 4A launch in New Delhi. While Xiaomi hasn’t given the exact capacity number of the plant, the company claimed is was now manufacturing one phone per second in India.
For Xiaomi, though, this might not be enough given the supply constraints it continues to face here. Most of Xiaomi’s devices are sold out within seconds of becoming available online during the weekly sales. However, Xiaomi India head and Vice-President Manu Kumar Jain said this is a problem they intend to solve. “The key for us was to start hitting one phone per second kind and we thought we will announce it only when we hit that number. Now we are hitting that consistently,” he said in an interaction with IndianExpress.com.
Jain said the company had been looking to expand its production in India since 2016, even though he refused to confirm a number on the exact capacity of these plants. Xiaomi’s plants are operated by Foxconn and they employee over 5000 people. Xiaomi says 90 per cent of the employees are women.
But Jain admitted that with just one plant, Xiaomi was struggling to meet demand. “We were already running at 100 per cent utilisation, but we were not able to meet the demand. Even today, with Redmi Note 4, we have sold 1 million units in 45 days, but probably if we had more stock we could have sold more phones,” he added.
So far Xiaomi is selling four phones selling: Redmi 3S, which has two variants, Redmi Note 4 which has three variants, Mi Max which comes in two variants and the flagship Mi 5 phone from last year. Other than the Mi 5 imported from China, Xiaomi says all of its phones are made in India.
However, Jain admitted that the company can’t really predict demand for its phones and said he didn’t know how much they wanted to ramp up capacity. “We are growing at more than 100 per cent each year. But the biggest thing still holding us back is supply, and we’re trying to improve this. If you look at the past, with the Redmi 1S first sale we had 10,000 units, with Redmi 3S phones we had 90,000 units in the first sale. With Redmi Note 4, we had a quarter million units in the first sale. We said quarter million is an unimaginable number, but it went out of stock in ten minutes. So really demand is difficult for us to predict,” said Jain.
Xiaomi is also broadening its base beyond the online-only model. The company has already partnered with Big C Mobiles, Poorvika Mobiles, Sangeetha Mobiles to make the Redmi Note 4 available in over 700 stores in South India. It also has plans for the North Indian market.
“By the end of this week, we will start selling across 1500 mom and pop shops in three cities in the North: Delhi Chandigarh and Jaipur. We are doing city level distribution in this region, and will take learnings from this and expand further,” explained Jain.
Xiaomi plans to rely on the pull model for its distribution, rather than the push model. Instead of getting distributors to buy huge inventory, Jain says they will ask the retailer to only buy the amount of inventory that can be sold. “We are saying don’t buy so much inventory, everyday if you can sell 2, 5 10 phones, we’ll supply only that to you. Then if you look at ROI, it is much higher, and for us this is cost efficient,” he added.
Jain said they will bring in only those products that will work in India. “Our portfolio is much smaller than other brands. This year, we’ve already launched two phones, and the Redmi 3S prime successor is coming next. We are just 175 employees,” he pointed out. Jain confirmed that the Mi branded flagship phones will come to India, but didn’t say when and which products will make the cut.