Xiaomi puts new Indian facility into production
Print Edition
CHINA’S Xiaomi has joined forces with Foxconn to start assembling phones in India, seeking to cut costs and grab a bigger slice of the world’s third-largest smartphone market.
The factory, in the southern state of Andhra Pradesh, is a fillip for Prime Minister Narendra Modi, who has championed a campaign to turn India into a manufacturing powerhouse to boost economic growth and create much-needed employment.
India is the world’s fastest growing smartphone market, but so far a lack of good suppliers and infrastructure have hampered efforts to manufacture phones in the country, forcing most of India’s more than 100 different phone companies to import from China.
The new assembly line went into operation yesterday producing Xiaomi’s first locally made smartphone, the Redmi2 Prime, an India-specific upgrade to its best-selling Redmi2. It will be sold at 6,999 rupees (US$110), the company said.
The Indian market, which Xiaomi entered in July last year, has fast become its second-largest, as the company’s low-priced phones find favor with young and cost-conscious customers.
In the April-June quarter, Xiaomi ranked seventh in terms of smartphone shipments in India — a segment dominated by Samsung and India’s Micromax Informatics, according to Counterpoint Research.
Manu Jain, Xiaomi’s India head, said that apart from bringing tax benefits, the new facility will help the company to manage inventory and reduce lead times.
“Over time, most Xiaomi phones sold in India will be made in India,” Jain said, though that could take some time given the lack of development of the local supply chain.
Xiaomi, battling slowing sales in China, is betting on emerging markets such as India and Brazil, where it began manufacturing in June, to fuel growth.
India had 140 million smartphone users last year, and that is set to rise to 651 million by 2019, according to Cisco.
As individual Indian states increasingly vie for investment, yesterday’s opening is a victory for Andhra Pradesh and its charismatic leader N. Chandrababu Naidu, who oversaw the development of tech hub Hyderabad, now in a different state.
Foxconn, a key supplier to Apple Inc, has been among the firms making the most of Indian states’ competitive streak. On Saturday, it signed a US$5 billion investment deal with the western state of Maharashtra.
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