Xiaomi, popularly called the ‘Apple’ of China, has just completed a year in India. From sales that crashed e-commerce sites to becoming India’s fifth largest smartphone vendor without spending a penny on advertising, Xiaomi has achieved more than what most of its rivals did in the first 12 months. BLink caught up with Xiaomi’s India head, Manu Jain, to understand how it keeps device prices so low and what Indian users can expect from it in the future. Edited excerpts:

You are completing a year in India. How do you rate your performance so far?

It is nothing less than phenomenal. The first time we had a sale, on July 22, we thought it would be an achievement to sell 10,000 devices. More than two lakh people visited our partner site that day and it crashed. We started selling 10,000 to 15,000 devices in a few seconds. In October, we offered one lakh devices and they sold in 4.2 seconds. In less than four months, we crossed the million-mark in sales. We believe we were the fastest to reach this figure in India. One out of every five to six online customers ends up buying a Xiaomi. It is incredible, given that we have not spent a single dollar on marketing.

Globally, Xiaomi sold 34.7 million handsets in the first six months of 2015 against the annual target of 80 million. What about the targets for the Indian market? Will you be able to meet them?

Any company which is growing really fast, and doing phenomenally, knows that its journey will be closely scrutinised. Xiaomi, for me, is the only B2C (business-to-consumer) company that doesn’t believe in KPIs (key performance indicator) or output targets like sales or market share.

Our end game is different: we are not just a smartphone company but a mobile or e-commerce company. Giving good customer experience with the right product and at the right price point is more important than KPIs. That’s our whole philosophy — to focus on inputs and not outputs.

Where does India fit in Xiaomi’s global plans?

India is an extremely important market for Xiaomi and the second largest revenue generator outside China. In the next two-three years, it is also expected to become the world’s second largest smartphone market. Considering the Xiaomi philosophy, India is a market that suits us really well. We work in markets where affordability is a big thing, because we bring devices at affordable prices but with the same specs as those that sell for ₹40,000-50,000. Secondly, markets where e-commerce is growing, and we can ride that growth curve, interest us. And markets where there is no operator subsidy suit us as consumers make independent device purchase decisions. India fulfils all the three conditions, so it’s a very important market for us.

What are you doing to engage with Indian consumers?

We are building products specifically suited to the needs of the Indian market. Mi4i (a budget version of its flagship Mi4) has been designed for India. We are setting up an R&D centre and a manufacturing plant here. Besides, we will have full-fledged e-commerce operations and 100 exclusive service centres here. We are also experimenting with home pick-up and drop service, which shows our commitment to the Indian market.

Your devices are said to be a poor man’s iPhone, given the close resemblance to some models? Do you think Xiaomi’s styling and design language will change in the future?

I think that comparison is incorrect. I don’t think people compare us with Apple because of similar design. A lot of people compare the two because both, in their respective ways, are phenomenal companies which are disrupting the way technology is consumed by consumers. That is far more fundamental and important than just design. A large number of our products have unique and different design language. Our Mi Note, 5.7-inch screen device, has glass at the front and the back. There is no other device that is as beautiful as it is.

If you look at our entire ecosystem of products, air purifiers, Mi TV, Mi Pad, Mi Box, we are different from any other company.

You are able to compress specs given by expensive handsets to affordable devices? How do you maintain such low price points?

There are three things which help us price our products reasonably. One is the philosophy that we want to cut costs without comprising on quality or specs. There are two angles to it. One, we don’t incur any major marketing costs. A lot of brands spend five to 10 per cent of their annual revenue, sometimes even more, on marketing. We save that and pass on the benefits to consumers. Two, most brands sell through brick-and-mortar retail — you have national and regional distributors and retailers and you end up giving 20-30 per cent to this chain. That also helps us keep costs in check.

Also, since we sell B2C, we don’t earn huge margins on hardware as other brands do. Our philosophy is to make money on our internet platform MiUI (which offers services like MiCloud, Xiaomi App Market, and Xiaomi Games Centre).

Will manufacturing in India be viable given that costs here are higher than in China?

Of course, yes. We took this decision before the budget announcement on tax duty. Since India is important to our global plan, it would be good to have a plant here so that we can design in the R&D centre and manufacture locally. With the changed duty structure, there is a significant difference in tax duty if you manufacture vs import. But our criterion was more than just financial. We want to be close to consumers in India.

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