When Chinese smartphone maker Xiaomi entered the highly competitive Indian market, not many gave the firm a chance. While the higher end of the market was dominated by Samsung, there were a bunch of Indian brands such as Micromax and Lava which had caught the imagination of consumers at the lower and mid segments of the market. Two years later in 2017, Xiaomi has crossed billion-dollar revenues here, catapulting itself to the number two slot. In an interview with The Hindu , Xiaomi’s co- founder, chairman & CEO, Lei Jun , talks about India becoming the largest market for the company outside of China, his next big bets and the possibility of entering the financial services market. Excerpts:
Did you expect India to grow so fast?
Over the long term, we really believe that the Xiaomi model is very powerful. Yes, the speed of growth is way beyond our expectation. In China, we have become number one, and then we became number three in the world in just two and a half year’s of our launch. Even today, we can’t believe how that happened as the competition has been fierce in this market. But the same story is unfolding in India. Two years after we launched here, we have become number two.
In 2016, you had said that Xiaomi will become the number one player in India in 3-5 years. Could you reach the target faster?
We have still two more years ( Laughs). It depends on the India team. There is a lot of pressure on them. India’s success has proven that our model can be successful even outside China.
Now that the China market itself is slowing down for you, has the importance of other markets such as India grown?
First we need to understand why there was a slowdown in China. In China, we already have majority of the market share of the online sales. But online is only 20% of the overall smartphone market in China. So, we had to rethink what we have to do in offline. After one year of experimentation, we have found the right solution. We call it the new retail or Internet plus. We can use the same cost model as in e-commerce to do offline. We can price products the same, for online and offline. In China today, we have again picked up momentum. We will try the same model in India this year.
Services is a key element of your strategy. Do you see any interesting services in India which could be part of Xiaomi?
Globally we have invested in 165 companies. We have seamlessly integrated those services into our software. We build services on our own and also work with others. The key message is ‘how do we deliver the best to users?’ We will use the same strategy here in India. If there is a start-up in India which does good work then we will work together.
Would you invest in Indian start-ups?
Of course. We are looking for more market share here, so need to work with high-quality start-ups. As the mobile Internet progresses, there will be a need for better smartphones.
What are your next big bets when it comes to mobile tech?
The next wave of transformation will be in the area of artificial intelligence (AI). We have deployed a lot of engineering resources in AI. Give us some time, once we launch some products in this area, we will elaborate more. But AI will have a major impact.
You have financial services in China. Will Xiaomi move into this space in India?
We are exploring the possibility of providing financial services in India. But this sector is highly regulated. It requires different licences. If we could obtain such licences then we are more than happy to be part of the financial services innovation in India.
You have set up local manufacturing here. Can India match China in manufacturing? What can the Government here do more?
If the Government focuses on it, then I believe India can be at a very good level, one day. It would be great if the Indian Government can come up with more policies that would attract global players. Maybe the Indian Government can take best practices from other countries where manufacturing is happening and perfect that over time. The basic prerequisite is that the cost of manufacturing in India cannot be worse than other countries.
You have crossed the billion-dollar revenue mark in India. When do you cross $2 billion?
We will surpass two billion this year. Our India team has promised us 100% growth every year. The possibility of crossing two billion is 99%.
As we seek better market share here, we need to work with start-ups