Xiaomi wants to incubate hardware start-ups

Venkatesh Ganesh Bengaluru | Updated on January 15, 2018 Published on April 03, 2017

Chinese electronics company Xiaomi is looking to incubate hardware start-ups and wants to open more manufacturing units as it sees considerable potential in the world’s third largest consumer market.

Jun Lei, Chairman and CEO of the multi-billion dollar privately held company, which makes Mi range of smartphones, said that its India operation, which locked $1 billion in revenues last year, is performing very well.

“Our products are sought after but we are unable to supply them,” he said, adding that it will take 2-3 months for the issue to be resolved. Lei, one of the 8 co-founders of the $60 billion company, is on a one-week tour of India and has met Prime Minister Narendra Modi and other ministers as a part of the company’s India commitment — both in terms of making investments and manufacturing its products.

“We have invested $500 million so far and will continue to scale it up,” Lei said, adding that in his conversation with Modi, the Prime Minister was keen to pre install e-governance apps on smartphones.

Another reason for Lei’s bullishness has to do with the fact that smartphones are still expensive in India when compared to the per capita income of the people. Currently, there are smartphones available in the sub-₹5,000 range, which Lei rubbishes as sub-standard quality. “A good one will cost upwards of ₹8,000 and most of them are not of good quality,” he said. According to research from IDC, Xiaomi with a 6.6 per cent market share, and lags behind leader Samsung, which had a 24.8 per cent market share, in terms of shipments at the end of last year. The Indian smartphone market is seeing stiff competition from other Chinese smartphone makers such as Oppo and Vivo, which are making fast inroads.

Xiaomi’s push into the Indian market has evolved over the years. From hiring a chartered plane to ship its phones, it now has a partnership with Foxconn to manufacture phones from India, as a part of the government’s Make in India initiative. However, most of it involves assembling of phones and not strict end-to-end manufacturing. “That will take some time but the government has taken the right step by kickstarting assembling of phones in the country,” he said.

The electronics maker, which gets 90 per cent of its sales through Amazon, Flipkart and its own, is also mulling a retail store launch. It did not provide details but said that its stores will be called Mi Home and will be an experience store rather than a place where products are sold.

Further, in line with its global strategy of incubating hardware start-ups, Xiaomi is adopting a similar strategy in India.

“We will incubate and if needed even invest in Indian hardware ventures,” Lei said. Till date, the company has incubated in 165 start-ups globally.

Published on April 03, 2017
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