Need better sops to export from India: Xiaomi
Xiaomi has urged India to provide better incentives than offered by China and Vietnam to be the export hub.
The smartphone maker though begun exporting some models in its portfolio to Nepal and Bangladesh on a trial basis, after crossing over 100 million cumulative shipments in India till July, within five years of starting operations in the country.
“In any country, in any market across the world, no other brand has been able to sell over 100 million smartphones within first five years…,” said Manu Jain, vice president of Xiaomi, told ET.
He added that through its pilot exports, the company wants to understand how the duty structure designed by the government works, before taking a call to expand it.
“The cost of local manufacturing (in India) is higher than the global average, especially that of China and Vietnam. It will be helpful if the India government can incentivise to make exports price competitive with global standards,” Jain, also managing director of Xiaomi India, said.
India intends to promote local production for exports for which it has allowed 100% foreign direct investment (FDI) in contract manufacturing. The government has also eased local sourcing rules for single brand retail trade (SBRT) allowing them to include exports, aimed at expanding local manufacturing and weaning away manufacturers from countries like China and Vietnam, amid growing Sino-US tensions.
Xiaomi, on its part, has increased its overall manufacturing capacity to three phones per second from one phone per second two years ago, supplied by seven plants operated by three contract manufacturers – Taiwan’s Foxconn Technologies, US-based Flex and China’s HiPad Technologies.
The high production capacities have made it the No 1 smartphone player in India by shipments for eight straight quarters. As of June, its market share was 28.3% share in the smartphone market, said IDC India.
In 2019, Jain said that basis IDC estimates, Xiaomi should clock shipments of 40-50 million smartphones, after recording 20 million in the first half. It expected overall smartphone shipments in India to rise to 150-155 million for 2019, from 143 million in 2018, a growth of around 8%.
But the company has back up plans to counter fears that demand for smartphones will slow down in the second half, given the overall gloomy economic environment, which may force consumers to push back purchases of new phones.
“Not only do we have one back up, we have three-four different versions of the plans in case things don’t go as per plan. One can never predict the future because our industry evolves every quarter, unlike other industries that are much more stable,” Jain said.
The Beijing-headquartered company aims to more than double its number of exclusive stores to 5,000 by 2020, which will include ones owned by franchisees, which will make the brand the largest retail network by a single brand retail entity, Jain said.
It will also make the company one with the largest rural retail network with over 2,000 Mi stores in villages and talukas across the country. The offline presence will get expanded to 400 cities by the year end, from 200 at present.