Xiaomi comes to India! Should local players be worried?
The Chinese player will compete directly with Indian brands Micromax, Karbonn and Lava. The battle is going to intensify in soon-to-be world’s 2nd largest smartphone marketBy Maneka Tanwani 18 Jun, 2014
Chinese smartphone maker Xiaomi has its eyes set on India. After entering Singapore this January and creating a lot of intrigue and interest in the market there, the next step in its global expansion plan is India.
And it is not surprising, to say the least! After all, India is soon going to snatch the title of the world’s second largest smartphone market after China. According to industry studies, India’s smartphone-owning population is expected to more than double in 2014, reaching from 156 million to 364 million people from a population of 1.2 billion.
Hugo Barra, Head of Global expansion, Xiaomi (recently rebranded as Mi) announced this development on his Facebook page…”Namaste — Our journey into India starts at www.Mi.com/in. Exciting times ahead!”
Media reports suggest, we will see the first smartphone being launched in August, 2014.
Who will it compete with?
The most competition Xiaomi will face from is local Indian players. Brands such as Micromax, Karbonn, Lava have a strong foothold in India because of their aggressive pricing. Not to forget LG, Motorola and the lower-end models of Samsung. Today, the top-10 space is dominated by Micromax, Karbonn and Lava, which together account for over 30 per cent of the smartphone market. Micromax’s 17.5 per cent share is second only to Samsung, according to a report by moneycontrol.com.
Xiaomi has seen quite a lot of success in markets like Singapore, with handsets being sold out in a matter of few minutes. Its Redmi phone was out of stock in eight minutes during a limited-time sale on its e-commerce website, while all Mi3 phones were grabbed in just two minutes. Such a frenzy is unheard of in India. If the brand manages to work the same magic in India, it may be a cause of worry for local players and even the giant that is Samsung.
What strategy will it employ?
What has been seen is that Xiaomi first launches its extremely pocket-friendly smartphone Redmi to grab attention in a local market. This phone retails at US$133 (INR 8000). Redmi is then followed by it Mi3, sold at US$331 (INR 20,000). Will we see the same strategy being deployed in India?
It is important to note here that India is an extremely price- and features-sensitive market. And smartphones here are available for as cheap as US$100 (INR 6000) (read Micromax and Motorola). So Xiaomi just banking on its price point may not be the best way to move forward in India. We believe it will come down to the technology, ease of use, and the features it can provide to the Indian consumers as compared to local brands. It will hit a home run if it provides the best bang for the buck. It will really have to woo the consumers and create brand value, considering Indians are not known to embrace newer, lesser known brands with ease. Micromax is a case in point…it took a long while for the Indian brand to become the name that it is today.
Will flash sales work here?
No smartphone maker has taken the flash sales route in India. The way this market has worked is that brands have had to slowly and steadily work their way in. So it will be interesting to see whether Xiaomi will use the same strategy that has worked in Singapore and how the market responds to the same.
Going forward, Xiaomi wants to enter Southeast Asian markets such as Thailand, the Philippines and Vietnam. The Chinese brand has very ambitious plans. We await to see how it fairs in India and the above mentioned other markets.
Watch this space for more!