The importance of the Indian smartphone market cannot be understated for Xiaomi. India is the Chinese OEM's second largest market after China, and it has been having incredible success in the country. Only a few quarters ago, Xiaomi wasn't even in the top five list of smartphone manufacturers in India, but now, it is either tied with Samsung at the top, or is the second largest manufacturer in Q3, depending on who you ask. As such, Xiaomi India has launched new products at an increasingly quick rate, and has added more localisation features in MIUI 9.
Livemint had an interview with Xiaomi's Chief Executive Lei Jun. The Chief Executive stated that the company will invest as much as $1 billion in 100 startups in India over the next five years. Through this, it is seeking to create an ecosystem of apps around its smartphone brand.
The Livemint report says that Lei had stated that Xiaomi along with Shunwei Capital (its sister company) have already purchased stakes in six Indian internet companies which include Hungama and KrazyBee. The sister companies are said to invest in businesses such as content, financial technology, hyperlocal services (including mobile phone repairs) and manufacturing in order to increase the adoption of mobile internet in India.
"In China, in the past four years we've invested $4 billion in over 300 companies. In the next five years, we will invest in 100 companies in India. We will basically replicate the most successful ecosystem business model of China in India. We will have all types of services and products and integrate them. That is the Xiaomi business model. We focus on a few key things and everything else, we let our partners provide. We've reached just a huge scale in seven years because of this partnership/affiliation model."
The report stated that after Internet giants Alibaba Group Holding Ltd and Tencent Holdings Ltd, Xiaomi is the most prominent Chinese investor in India. If the Chinese OEM meets the $1 billion investment target, it would become one of the most prolific internet investors in India, according to Livemint.
However, there is a difference in Xiaomi's investment approach. Unlike Alibaba and Tencent, the company is only looking for investments that will expand mobile internet usage and lock-in customers to its phones. This is because the Indian smartphone market is characterized by lack of brand loyalty. As a way of differentiation vis-à-vis competitors such as Samsung, Vivo and Oppo, Xiaomi hopes that its phones will become more lucrative to consumers as it seeks to provide entertainment content as well as other services.
Any apps that increase the frequency of usage of smartphones—we're interested in this. As long as it is related to acceleration of mobile internet. We only pick minority stakes. The purpose is to work closely (on the business side) with these companies."
He also stated that Xiaomi will introduce more products in India over the next two quarters. The company currently sells its phones in 60 countries, and has recently expanded to Western Europe. The report noted that India is the company's biggest market outside of China, but the range of Indian products is still low as compared to China. In its domestic market, the company sells a variety of products including laptops, air purifiers, water purifiers, and more.
Finally, Mr. Jun told Livemint that the company wasn't planning to list its shares in the near future.
Right now, we do not have such plans. Being a public company has its advantages and disadvantages. We can only go for an IPO when we feel comfortable. We have enough cash. We haven't made any losses except in 2015 when we lost a little bit of money because of working on global expansion.
With the investment target of $1 billion, Xiaomi is certainly sending a statement of intent that it plans to be a part of the Indian smartphone market for the long haul. As long as it keeps offering products that offer high value-for-money, the future looks bright for the Chinese OEM.
Source: Livemint
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