Bengaluru: Chinese smartphone maker Xiaomi Corp. disrupted the Indian market with its cost-efficient Mi range of phones and has gained handsomely since it introduced them in the country in 2014.
According to International Data Corp., Xiaomi, along with South Korean firm Samsung Electronics Co. Ltd, were joint leaders in the Indian smartphone market with each controlling 23.5% market share. Lei Jun, Xiaomi’s founder, also known as LJ, believes his company needs to forget that they are No.1 in the market even though the company will get the confidence to do “cool” things in India.
In an interview, the 49-year-old Chinese entrepreneur said that his firm has given India priority over its home market China and will build products keeping India in mind first. With a research and development (R&D) centre, coupled with focus on design in India, the company plans to bring around 200 products in India which are not just smartphones. Edited excerpts:
You have become joint No.1 in the Indian market in no time. How do you plan to consolidate your position?
Ranking No.1 to the Indian team is still very crucial and important. Most importantly, it will give a lot of confidence to the India team. Also, China is such a gigantic market and in India, we have proven that Xiaomi products and the model. The next thing that we are to do is that forget ourselves being No.1. We are a start-up. We need to build the coolest products and offer them at a very honest and reasonable price. Then, more Indian customers will like our brand. We will bring them a lot more cool and interesting products. So, we really don’t need to worry about how the competitors see us. We just have to keep up to what our fans think about us.
What sort of war chest have you prepared in terms of new products, investments, etc?
We will definitely bring more interesting and high quality products into the Indian market. For example, this pen (shows a pen) costs two US dollars and it is a very smooth writing. Another example is screw drivers… very exquisite. In China, we sell it for 100 RMB. Other competitor products are 10 times worse in quality but three times more expensive. This is the most favoured screw drivers by engineers made by Xiaomi.
So, which of the other products do you plan to bring to India?
That you will find out in the next two months. In China, we have some 200 products. In India, we have some 20 products, which is very few… mainly because we have very few people in India office… only 350. We are growing way too fast.
So, we really need to select the products that Indian consumers will love the most. We believe it will take us 3-4 years to reach to the levels of 200 products, which we could bring in.
So, you are saying that you are constrained by your team strength in India to launch new products?
No it is mainly because of the rapid growth that we have seen. Because, even if we bring them to India, we won’t do justice as the customers won’t really understand why they are so good. So, our philosophy is all about being focused.
So, quantity is not the most important metric. It is actually every product has to be a best seller.
Most of these products that we are talking about are initially designed for the Chinese environment. So, in the past two years, we have implemented India number one priority strategy at our headquarters. From R&D, design, we have considered a lot of Indian consumer needs.
For example, India’s climate is hotter. In China, we have such good products; but when we brought them to India, some users said there are some overheating issues. In the beginning, we were very confused and realised they suffered initially because of India’s climate. So, later in India, while selling products, we included a lot of these thermal diffusing components, including the charging cable, which is very good quality in China. In India, some people were complaining that there are some defects with the cable. So, we discovered the reason. Because of India’s humidity being higher, when they plug in many, many times, the coating will get eroded. Then we applied thicker coating, including the charger.
Is that something you have planned for other products, which are not in India yet?
We cannot just simply bring them over from China directly. We need to first understand the user’s needs and likings. Even we would require some team members to move over to India to build India-specific products… may be we build products that we won’t sell in China. That way Indian fans will love us more… We will also set up an R&D centre in Bangalore in future. We will hire more local engineers just to design India products. Next year, you will see India-specific products.
So, they will be more than just smartphones?
What percentage of India revenue comes from smartphones?
We have not disclosed our India revenue because we are right now in 60 countries. We have 12 countries where we are ranked in top five. Of course, India is performing the best of all the countries in terms of shipment and scale of work. Perhaps, by the end of the year, we might disclose that number. So, we have adopted the India No.1 strategy, which includes design, R&D, manufacturing, supply.
So, are you giving India a priority over your home market as well?
Yes. Even the Chinese teams had some opinions as everything was prioritized India. We became No.1 because our company is small, so we focus all our energy on India. That’s why we have really supported India on the supply front.
India has seen a data outburst recently. What kind of impact will that have on the smartphone market?
Popularization and adoption of smartphones, 4G data plan coming down will really help us celebrate the mobile internet development in India. It will really help accelerate Indian society’s technological innovation of India. It is essentially building a gigantic information infrastructure and highway for India. Because data is so cheap, India pretty much skipped the broadband era. A lot of times, Indian users consumed way more data, compared with Chinese users.
Of course, the Chinese went through the PC internet era before they went to the mobile internet era. Chinese internet has produced companies such as Alibaba, Baidu and Tencent. These are all now global juggernauts. So, this popularization will definitely help the whole industry in India. In the next 5-10 years, India will produce 5-10 global internet companies.
This year has been a comeback year for Xiaomi at a global level. What impact has it had on your valuation?
Valuation is not the most important thing. We’re one of the very few companies that are willing to build world-class products but offer them at a very reasonable price. Look at Apple and Samsung, their prices keep going up! We’re not like them.
In the past two years, when we were doing a restructuring, people think that Xiaomi is no longer doing well. Because we’ve grown too fast there are many difficulties. From the 10-15 people who started the company to more than 10,000… So in the past two years before this, we have only one aim: strengthen the fundamentals. We don’t care about revenue and we didn’t pursue growth. It’s only at the beginning of this year that we started pursuing growth again.