A few days ago a 40-year-old business executive was waiting for his cab in Bengaluru and his mobile phone was brazenly snatched out of his hand by a thief racing past on a motorcycle. The executive was Pete Lau, founder and chief executive of the premium Chinese smartphone maker OnePlus, who frequently travels to India. The theft was captured on CCTV and thanks to the swift action of the Bengaluru city police, Mr.Lau was able to recover his OnePlus 3 phone in just two days. Mr.Lau has put the incident behind him and is focusing on tapping India, the world’s fastest-growing smartphone market.
In an interview with Peerzada Abrar , Mr.Lau revealed OnePlus' expansion plans in India which include local manufacturing and setting up its first R&D centre outside China in Bengaluru. Edited excerpts:
What are your views on the Indian smartphone market?
Before we entered India, the thinking was that India will buy cheap products. After we came here we actually found out that India is actually yearning for premium products and there are a lot of people in pursuit of quality products.
Ultimately we found India was a very good opportunity for us as a company, how to make good products and how do we use the e-commerce model to disrupt the traditional brands. We hope to be clearly positioned as the best Android-maker. We started in December 2014 (in India), in the first year we got 7 percent and are third in the market behind Samsung and Apple in terms of market share. And we are only following the ecommerce business model, no offline.
Your rivals such as Apple are reducing prices.
We don't see this as a huge problem for us. We are very clear on our positioning, we want to make the best Android flagship phone. And we are also clear about our business model which is ecommerce. With these two things, we think we can bring a lot of value to our consumers. For example, if you take Mercedes, everyone knows that it is a premium product. Now if Mercedes starts selling online only, they are able to cut prices by 30 per cent. Now you have lot of users who looked at Mercedes as a premium product. They couldn't afford it before, but it is 30 per cent cheaper now and it makes lot of people to buy Mercedes than before.
In India, Chinese brands are associated with cheap products. Would you like to comment?
There are obviously historical reasons why this is the mindset. But for us, we just try to make the best product. We don't pay heed to what other people say. Don't ever think that users are stupid, they are the smartest.
As long as you put a good product in front of them, they would be able to find it out that it is a good product and it does not matter where it comes from. Apple is also made in China. For OnePlus devices, we don't observe this problem at all. Users line up for hours at our pop-ups (temporary retail stores) in Europe and North America to buy our devices. We had three pop-ups in India, including Mumbai, where 2,000 people lined up.
Other phone-makers have access to same design and technology. Right?
This is a misunderstanding about product development. For example at the time of OnePlus One, everyone was using polycarbonate as the body (of the phone) but why people liked OnePlus so much was because of the use of sandstone. It is about the level of detail and understanding of design and innovation. That makes the difference. Now everyone is using metal for the bodies, the consensus is that Apple still looks the best, why is that? That is because of the details in product development and design. So, when we launched OnePlus 3, everyone said this looks like any other phone, it is just aluminum unibody, but when the consumers really got it in their hands, the consensus feedback we got is that it really feels premium.
Your plans for India?
We actually manufacture some OnePlus X locally in Sri City in Andhra Pradesh. We are in the process of bringing OnePlus 3 manufacturing to India. It is very difficult to maintain quality in India.
The main challenge is that the manufacturing infrastructure is not as mature as in China. So, it is a lot harder to make the same quality products as in our factories in China. There are definitely economic benefits in local manufacturing in the form of tax rebates.
A R&D centre in Bengaluru is definitely a direction we would take in the future. Right now, we have hired a lot of Indian engineers to work at our headquarters (in Shenzhen). These engineers are providing value for the localisation of the software, because they understand the India market better.
What have you learned from India?
If you make a good product, people will come. We don't really look at price points and we don't want to go down the price bracket to pursue higher volumes. The only pursuit is how to convert Apple and Samsung users to buy OnePlus.