Xiaomi to increase domestic value addition

Chinese smartphone company Xiaomi — which just completed nine years in India — is in the process of change. Xiaomi, which was the largest-selling smartphone brand in India till Q4 of 2022 is no longer pushing for the pole position. “We clearly knew in Q4 of 2022 that we would lose the number one spot,” says Muralikrishnan B, president, Xiaomi India. The Chinese handset maker has taken a conscious call to focus on “sustainability and profitability” over volumes.

Based on IDC data for Q1 of 2023, Xiaomi’s market share dipped to 16.4% in India, from 23.4% in the same quarter in 2022. It is now behind Samsung (20.1%), Vivo (17.7%), and Oppo (17.6%). Muralikrishnan does not expect Xiaomi to be the leader again in 2023.

Also, Xiaomi, which has been making phones in India since 2015, is looking to almost double the domestic value-addition in the phones that are made here. It will increase domestic value-addition from the current 17% to 30% over the next two years. That will happen as the company plans for the year include making display modules, fingerprint sensors, vibration motors, and multiple die cuts here. “We are having these conversations to localise and increase domestic value addition,” says Muralikrishnan.

On the manufacturing front, Xiaomi has a contract with Dixon Technologies to manufacture TVs. Last month, it struck a deal with Optiemus to manufacture true wireless earphones in India. All the Xiaomi phones and TVs sold here are made in the country.

At a global level, Xiaomi is entering new areas. Smart manufacturing is one, with a smart factory in Beijing. It also plans to launch an electric vehicle in China, but there are no plans to launch electric vehicles in India as of now. It has lined up plans to invest 100 billion RMB during the period 2022-’26.

In 2023, it plans to have a clearer portfolio of products (fewer models), improve customer experience and Make in India. As things stand, it sells 60% of its phones in India offline, while online accounts for 40%. According to Anuj Sharma, Chief Marketing Officer, Xiaomi, it has plans to improve the camera quality by entering into a long-term partnership with Leica Camera. The idea is to bring around DSLR-like qualities to mobile phones.