Xiaomi dialing India for new world of growth

Xiaomi Corp, a company known for its aggressive pricing strategies, on Tuesday became the latest Chinese smartphone maker to debut its products in India.

The privately owned company expects its products to be popular with customers in the fastest-growing telecom market in the Asia-Pacific region.

Xiaomi, based in Beijing, is selling its flagship phones through Flipkart, an Indian online electronics marketplace. The company did not disclose its sales target.

Hugo Barra, Xiaomi's vice-president in charge of international business, told reporters in Mumbai that the Chinese phone producer is planning to build an India-focused ecosystem rather than earning profits.

Nicole Peng, research director of market data firm Canalys China, said that Xiaomi has gained a lot of attention in the Western media during past 12 months. "This has helped Xiaomi gain greater consumer traction in overseas markets—an important first step."

Overseas markets have often proved to be a vastly different and often challenging playing field for Chinese companies, Peng said, adding that it is important for Xiaomi and other Chinese vendors to put investment "in the right places" such as channel building, patents, supply and inventory.

"We understand that Xiaomi is making progress in all these areas, but it is still too early to judge its overseas strategy," said Peng.

Xiaomi sold more than 26 million smartphones in the first half of this year, a year-on-year growth of 271 percent, the company said earlier this month. Most of the devices were sold in China, although it said it would expand into Singapore, Brazil and Mexico.

Xiaomi is scheduled to unveil its next-generation flagship smartphone on Tuesday. The gadget, likely to be named Xiaomi 4, will feature a metal case for the first time.

Chinese smartphone makers like Lenovo Group Ltd and Huawei Technologies Co Ltd entered the Indian market more than two years ago and are still striving to boost their market shares.

Samsung Electronics Co led the Indian smartphone market with more than a one-third market share in the first quarter, according to global consultancy firm IDC. Three Indian vendors—that are not known much outside the country—took a quarter of the share.

Chinese firms, however, are pinning big hopes on growth in the second-most-populous country because of the rapidly surging demand. About 17.6 million smartphones were sold in India from January to March, representing a whopping 186 percent year-on-year jump, according to IDC. The increase was the fastest across the Asia-Pacific region.

Cedar Zhang, marketing director at vivo Communication Technology Co Ltd's India arm, said that the sales channel in India is less sophisticated than that in China. "Most of the devices sold in India are not bundled with telecom carriers. This is a major reason why the Indian market is appealing to most Chinese firms."

The Guangdong-headquartered vivo is set to launch its products in India soon.

In addition, India, being an English-speaking country with an open mobile phone market, could also help Chinese companies to gain marketing and operating experience for future overseas expansion, said Zhang from vivo.

Chinese manufacturers' going global attempts are also part of their efforts to offset slowing smartphone shipments within China. Profit margins for local companies are shrinking rapidly as most of the devices they sell are in the highly competitive middle and low-end segment.

Analysts said that Chinese brands are better off in emerging markets as competition in developed markets has become intense. Telecom carriers in developed markets invest heavily in subsiding top-tier brands such as Samsung and Apple Inc, leaving limited space for smaller companies.