Xiaomi is now the second largest smartphone vendor in India. Its Redmi Note 4 became the highest selling smartphone in terms of volume in the first quarter of 2017, beating Samsung’s popular J series, which is a first. While we’ve seen three Redmi variants launch in India so far, there’s still no word on when Mi branded phones, (which are usually priced higher) will be launched in India.
IndianExpress.com spoke to Xiaomi India Managing Director and Vice President Manu Kumar Jain on what the strategy will be for India, what sort of devices to expect, and whether the company will bring more Mi ecosystem products to the market. Here is an edited excerpt from the interaction.
Xiaomi’s Redmi brand in India, on how it has become the defining one for the company
Redmi is our most popular series of smartphones. I mean both Redmi and Redmi Note series. This is more affordable series, usually priced around Rs 10,000 and it competes with phones which are double the price. When we started, 50 per cent of the market was less than Rs 6,000. Around 30-35 per cent was playing in the Rs 6,000- Rs 15,000 price bracket. Rest was above Rs 15,000.
There was a reason why we never targeted under Rs 6,000, because we felt we could provide a phone that had great consumer experience. We don’t think a Rs 3,000 phone from us would meet our quality standards. I don’t think I would be willing to use that phone as my primary device. So that’s why we never thought of launching any product in that price segment.
We basically chose to attack mid-price segment when we started with our Redmi series. I think over a period of time, more and more people are migrating from the under Rs 6K price range to the under Rs 12K kind of price range.
But remember, India is different from other countries. Most people are still first-time buyers, upgrading from feature phone to smartphones. People who are first-time smartphone buyers are still buying under Rs 6,000, but anybody who has bought a smartphone before, they are upgrading to Rs 6,000 to Rs 15,000 price range, which is where Redmi plays.
So now we have Redmi 4A, which caters to the first set of audience who want to buy under Rs 6,000. Then we have Redmi Note 4, and Redmi 4, which caters to the other segment of users.
On the success of Redmi Note 4
Redmi Note 4 has been the best-selling phone, number one in Q1. It’s not just online, but online and offline sales. For last six and a half years, only one brand’s phone was number one, Samsung J series. J2 was number one for the last couple of quarters. For the first time, Redmi Note 4 has become the number phone in a quarter with 1.8 million units sold in the Q1, according to IDC. In fact, everybody knows that we have a 4GB RAM+64GB phone at Rs 13,000. We will replicate the same story with Redmi 4.
On Xiaomi’s Mi Router 3C launching in India
India already has 140-150 million households with WiFi, and this will only increase. The problem which we see is that better network is needed, second the device needs to improve. The current set of devices don’t support really high-speed internet, and most routers are very ugly. Second, they don’t have great network strength.
Our Mi Router 3C changes all of that. Ours comes with 4 antennas, supports high-speed internet. Plus it is easy to set up, you can change settings at one go. There are multiple other use cases as well. You can create a guest login, check internet consumption and set an actual limit, and even block devices.
On Mi Home ecosystem products and their launch in India
We plan to launch as many products as possible and this will help with our Mi Home strategy. People can see and experience these products. Obviously, this doesn’t mean all our products will be coming to India.
The reason why we are not bringing all our products is not because of single brand retail issue. We are selling through our own e-commerce platform, but we have a partner who is doing it for us. Single brand retail would help us in the long run.
However, many of the products are not suited for India. To give an example, smart scooters are available in China, and they are successful. But in India, the road conditions don’t allow it. I tried doing it, using the smart scooter from my office to work, I could not do it.
Then some of the products will require customization. For instance, our water purifier in China is so beautiful. But in India, people face power shortage and water shortage, so we can’t launch the model because it doesn’t have a tank. If you go to Reliance, Croma Store, first thing people will ask: Tank ka capacity kitna hai. We have to customise our water purifier for Indian conditions.
Finally, reason number three is that many of these products have structural barriers. Like the Ninebot. This will face more than 100 per cent import duty. So a product that we sell for Rs 25,000, we’ll be selling it for Rs 60-70, 000 if we were to launch it here, and that doesn’t make sense.
We will bring innovative products, but we will make them super affordable. Plus our team size is very small. Please don’t forget that our team size today is 220-plus people, our entire sales team offline is about eight people, and offline it is four. In any of the other companies, they will have a lot more people for this. Some people will have 1,000 people for just sales.
So we’ll do things which will give us the biggest impact, things where we can do a quality job, rather than doing too many things. Do few things, but do them right. We would be launching many more ecosystem products over the years. We may also launch products that are designed specifically for India.
Xiaomi’s Mi Branded phones, given there were rumours they won’t be launching these in India
We carefully evaluate whether we should launch a product in India, and this is not just for Mi phones, but also for Redmi phones. We have to cutomize a product for India, the OS we have to customise, 4G bands, etc. And yes, certification takes one and a half to two months at times.
It is not fair to say we won’t bring more Mi phones to India. Mi Phones will be coming to market for sure. This will be an upgrade to what we launched in India last year. With 100 per cent guarantee, they will be coming to India.
Now I’m not saying a number, but many more Mi products are coming this year . It is not correct to say we won’t be launching Mi devices. For us, Mi is the flagship series. Our company logo is Mi. Of course, we would want to launch Mi devices. In both, Mi and Redmi we will pick and choose what will work in India. We didn’t launch Redmi Pro, here. We do a lot of testing with our fans. The ones we are confident about are the ones we launch in India.
On Xiaomi investing in Indian startups like it does in China
First, I’ll explain the way it works in China. Our total number of investments is more than 300. About Xiaomi specifically, we have done 165 investments. Out of which, 80 are in ecosystem companies, these companies design products for us, and they may design these products and sell them under Mi brand or a different brand. We don’t force them to sell under Mi brand.
But if they decide to sell under Mi Brand, then we work with them very closely, to ensure from a hardware and perspective that they are part of our ecosystem. So they are linked to our Mi home app. They will look similar from a design language perspective. We work very closely with these companies.
Out of these 80 or companies, only about 18-20 has launched products. Not every company has launched products. The products that only Xiaomi designs internally are three: Xiaomi Routers, phones and televisions. Rest everything you see, power bank, etc is designed by one of these companies.
So they design, and it is sold under Mi brand. One of our ecosystem companies makes the Mi Band, but also has their own watch called Amaze Fit, which has got nothing to do with Mi. They sell it on their own. There is, of course, sort of financial arrangement between them and us.
Many of these remaining companies are still under stealth mode. But four companies are already unicorns, valued at more than $1 billion. We are a significant investor in most of these, but not the majority shareholder.
In India, we have invested in five companies. We are open to investing in more companies. So far, we have invested in companies which are working on software. We’ve not found too many good hardware tech companies in India. We will be open to investing in these, if they we find something good. Unfortunately we have not come across such a company till now.