Last week, 700 stores across the southern states of Telangana, Andhra Pradesh, Tamil Nadu and Karnataka started selling the Redmi Note 4, Xiaomi’s fastest-selling phone so far. This week, another 1500 stores in Delhi, Jaipur and Chandigarh will join in too.
Xiaomi is in a hurry.
For a company that entered India in 2014, Xiaomi’s growth has been scorching. In just two years, it claimed to have hit one billion dollars in revenue. This January, it said it sold over one million of its Redmi Note 4 smartphones in just 45 days of its launch.
“Two years back, if you had asked me, whether we would cross a billion-dollar revenue in India in two to three years, I would have laughed at you,” says Manu Jain, who joined Xiaomi as the India head and its first India employee in May 2014. “We never imagined to be this successful when we started.”
Jain is now doubling down further, on offline stores. Because even though 90% of Xiaomi’s sales comes from online, 70% of Indian smartphone sales still takes place in offline stores.
Then there’s OnePlus. The online-only company with a rather passionate following (no mean feat in the crowded smartphone market) recently signed on Bollywood’s superstar thespian, Amitabh Bachchan, for its new campaign for its flagship OnePlus 3T smartphone. Easily among the most expensive and most desirable brand endorsers in the country, Bachchan is said to charge around Rs 5 crore for a one-year contract.
While Xiaomi and OnePlus had created enough buzz using fan clubs and user communities even before entering India two and a half years ago, there were other Chinese companies that made quieter entries.
OPPO, Vivo and Gionee entered India rather quietly in the second half of 2014 and started racking up market share by selling premium-looking phones at relatively low prices.
Today, the Chinese smartphone firms command about 50% of the market share in India while covering 40-50% of the country’s geographical area. And there’s no sign they’re about to slow down.
The Chinese squeeze
When Xiaomi entered India in 2014, most of the large Indian mobile companies dismissed it.
“Everybody we spoke to that time, said it was going to be a big disaster because smartphones were traditionally sold offline,” says Jain. “Initially, we got only 10,000 units, because 10,000 people were following us on Facebook. We thought at least they would buy our phones.”
At that time, Samsung had recently launched its flagship smartphone Galaxy S5 in India at a price of around Rs 51,000. So Xiaomi launched its Mi3 smartphone, with somewhat comparable technical and hardware specifications, but at Rs 14,999, less than one-third the price of Galaxy S5. Value-conscious Indian buyers crashed the site of Flipkart, where the Mi3 was being sold via a flash sale.