Xiaomi India plans to boost local manufacturing, create Apple-like ecosystem
Xiaomi is preparing to celebrate a decade of operations in India next month. Despite the Indian government's cautious approach toward Chinese-owned firms, Xiaomi is forging ahead with its ambitious plans. According to Mint, the company has outlined a three-year strategy that includes enhancing its local manufacturing and creating an ecosystem similar to that of Apple. The aim is to increase the localization of supply chain by encouraging more supply chain partners from various countries to establish operations in India.
Plans for local manufacturing and market share
Muralikrishnan B, President of Xiaomi India, revealed that the company's local manufacturing strategy involves a mix of imported and domestic supplies. "Almost 50-60% of the non-semiconductor bill of materials gets sourced locally which includes mechanics, fingerprint and camera modules, and more," he said. Additionally, Xiaomi India is also planning to regain its market share across various product categories over the next three years. The company's sales declined after leading the market for five consecutive quarters until the end of 2022.
Rebound strategy and market performance
Muralikrishnan stated that the company is aiming for a rebound in 2024 after facing challenges in 2022 and undergoing a recovery phase last year. "Our three-year strategy for India includes changing buyer perception in premium price ranges, create a complete device ecosystem, and focus equally on online and offline sales channels," he said. This strategy seems to be paying off as the company's shipments grew by 29% in the first three months of this year.
Response to government scrutiny and equity partnership
Despite the government's scrutiny of Chinese smartphone brands over tax evasion and alleged money laundering, Muralikrishnan did not comment on whether Xiaomi is seeking an Indian equity partner to continue its operations in India. He also refrained from discussing a letter addressed to the central IT ministry on how best to increase localization of its operations. However, he emphasized that Xiaomi's relationship with India operates differently from many other brands.
Early commitment to local manufacturing and future prospects
A senior executive working closely with Xiaomi's India hierarchy revealed that Muralikrishnan's letter to the Ministry of Electronics and Information Technology (MeitY) was in response to the latter's request for insights on its contributions to the local electronics and supply chain ecosystem. "Xiaomi India's conversations with MeitY have also been about increasing localization of the entire manufacturing ecosystem," the executive added.
