As Xiaomi is expected to celebrate its tenth anniversary in entering India in July, the company is strategizing to pivot towards premiumization, AIoT, ecosystem integration, and local manufacturing to reclaim its leadership position in the country.
Xiaomi made its entry into India in 2014, democratizing smartphones by introducing the country's first 4G-capable device priced below INR 10,000 (US$119.64). However, Xiaomi India President Muralikrishnan B. acknowledged to Business Today that in 2022, the company encountered difficulties. These included managing a bloated product portfolio and navigating a shrinking smartphone market, particularly in the entry and mid-level segments, where Xiaomi had placed considerable focus.
To overcome these challenges, Xiaomi adjusted its strategy by shifting its focus towards the premiumization segment and expanding its footprint in the AIoT sector. The company aims to reach India's 200-350 million households.
According to Muralikrishnan, Xiaomi tackled overexpansion by cutting its 2023 product launches and models by 40%. Simultaneously, Xiaomi initiated a multi-year roadmap focusing on premiumization to meet rising consumer demand for higher-end products in India, exemplified by the launch of the Xiaomi 14 and Xiaomi 14 Ultra in late 2023.
Instead of solely prioritizing smartphones, Xiaomi is expanding into AIoT with products like tablets, TVs, smartwatches, air purifiers, and robot vacuums, aiming to lead in connected home technology. Muralikrishnan underscored Xiaomi's ambition for every Indian household to possess at least one of their products. While smartphones remain their primary revenue source, Xiaomi has experienced significant growth in sectors such as TVs and tablets.
According to Muralikrishnan, Xiaomi is looking at 2024 as a year for a rebound after hitting a speed bump in 2022 and going through a recovery phase in 2023, adding that the strategy works as in the first quarter of 2024, Xiaomi's smartphone shipment grew by 29% year-on-year, faster than the overall market.
In another interview with Mint, Muralikrishnan discussed Xiaomi's manufacturing localization strategy. Xiaomi sources 50-60% of non-semiconductor components locally, encouraging suppliers to set up operations in India for further localization.
Xiaomi has faced challenges in the Indian market of late. Despite its early dominance, the company saw a significant 24% year-on-year drop in smartphone shipments in 2022, relinquishing its leadership to rivals Samsung and Vivo in subsequent years. Alongside this, Xiaomi has grappled with heightened regulatory scrutiny amidst economic tensions between China and India. Moreover, a notable departure of executives has also disrupted Xiaomi's operational stability.
Source: IDC, June 2024
