According to foreign media reports, Xiaomi is making major adjustments to its India strategy. The company had previously misjudged the tastes of Indian consumers, a costly blunder that allowed Samsung Electronics to overtake Xiaomi as the No. 1 manufacturer in the world’s second-largest phone market.
Today, Indian consumers are willing to pay more for better-looking and feature-rich models, but Xiaomi has remained focused on selling phones that cost less than 10,000 Indian rupees (about 835 CNY). In contrast, Samsung has launched a phone that meets the expectations of Indian consumers and has provided innovative financing options to make it affordable for most people.
High-end trend
The moves by Samsung have helped it wrest leadership from Xiaomi in the highly competitive Indian phone market. According to data from market research firm Counterpoint Research, in the fourth quarter of last year, Samsung’s share of the Indian phone market reached 20%, surpassing Xiaomi’s 18%.
“The Indian market is going through a ‘premiumisation’ trend. (But) Xiaomi is ill-prepared for this shift with its focus on budget-friendly phone portfolio,” said Tarun Pathak, research director at Counterpoint.
Xiaomi’s share in India overtaken by Samsung
India has 626 million smartphone users, second only to China. Xiaomi’s loose grip on the Indian market shows how, in a fast-growing economy with rising disposable income, companies that fail to cater to changing consumer preferences will be penalized.
For example, India’s Tata Motors once launched a well-known Nano car, priced at 100,000 rupees (about 8,345 CNY), and claimed to be the cheapest car in the world. But Indian consumers are reluctant to buy because they associate low prices with poor quality.
According to Counterpoint, the market share of phones priced under $120 (about 829 CNY) in India has fallen from 41% two years ago to 26% in 2022. In contrast, high-end phones priced above Rs 30,000 (about 2,505 CNY) doubled their market share to 11% during the same period.
Both Xiaomi and Samsung see India as a key growth market, and their best-selling electronic devices are smartphones. For 2021-22, Xiaomi India will have a total revenue of $4.8 billion, while Samsung will have sales of $10.3 billion, of which $6.7 billion comes from smartphones.
Coping with inadequacy
Xiaomi, however, is already under pressure in India as at least five top executives have left and government scrutiny has intensified. Previously, Xiaomi had $674 million in funds frozen by India’s financial crimes agency due to alleged illegal remittances to foreign entities. Xiaomi denies this.
As can be seen from the products listed on the Xiaomi India website, the phones offered by Xiaomi have failed to keep up with the premiumization trend of Indian consumers. Xiaomi showed six models priced above $360 (about 2,485 CNY), while Samsung had 16. Among phones under $120, Samsung has seven models, while Xiaomi lists 39 models, most of which are out of stock.
Over the past two years, high-end phones accounted for only 0% to 1% of Xiaomi’s total phone shipments in India, while Samsung’s share of high-end phones more than doubled to 13%, according to Counterpoint.
Samsung uses high-end phones to account for 13%
Xiaomi also admitted that it had launched “too many” models in the past. The company is tweaking its product line to focus on high-end smartphones. In January this year, Xiaomi launched the Redmi Note 12, with a top-of-the-line version priced at more than 30,000 rupees (about 2,505 CNY), and the recently launched Mi 13 Pro priced at 79,999 rupees (about 6,678 CNY). The most expensive phone in India. The shift in strategy seemed to be immediate, with the Redmi Note 12 raking in $61 million in sales within two weeks of its launch.
“We have launched a streamlined and simpler product portfolio focused on building expertise in the premium segment, and the launch of our latest flagship Mi 13 Pro is a step in that direction,” said Muralik Rishi, President, Xiaomi India. Muralikrishnan B said, “We understand that we have a long way to go on this journey, so we will launch a stronger product.”
Restrict Chinese brands from selling low-end phones
Interestingly, it was reported in August last year that India was seeking to restrict the sales of phones sold by Chinese phone brands below 12,000 rupees (about 1,001 CNY) in order to support the domestic phone industry that is not developing well. This will affect a number of Chinese companies such as Xiaomi, OPPO, and vivo.
People familiar with the matter said at the time that the move was aimed at squeezing the Chinese mobile giant out of India’s low-end market. There is growing concern in India that high-volume phone brands such as Realme and Transsion will undercut local manufacturers, they said.
Now it seems that if Xiaomi was restricted by the Indian policy in the low-end phone market, it would have accelerated its transition to the high-end phone market. Smartphones priced under $150 accounted for a third of phone sales in India in the second quarter of last year, with 80 percent coming from Chinese companies, according to Counterpoint.
Phone loan
Meanwhile, a Samsung program with financing partners that provides “convenient and guaranteed” loans has been instrumental in its recent success in India, helping the company achieve a $1 billion phone deal last year. Sale.
Even people with no loan history, low credit scores or no pay slips can buy phones, Samsung said, according to a poster of a Samsung phone found by foreign media on a dusty fruit shop street in Uttar Pradesh, India. Sanjeev Kumar Verma, owner of a nearby multi-brand phone store, has benefited from the company’s loan program. In an interview at his store, Verma said he used to sell five Samsung phones a month but has quadrupled to 20, 18 of which are purchased through the loan program.
Verma and another smartphone vendor in Mumbai said that unlike its rivals, Samsung does not require proof of a local address, making it easier for migrant workers or those working away from home to take out loans to buy phones. Samsung has yet to comment.
Raju Pullan, head of Samsung India’s mobile division, said in February that the growth of the high-end phone market in small towns was much higher than in big cities. Nearly half of consumers who choose its financing plan are first-time loan seekers, he said. Samsung said its financing app installed on smartphones can lock devices and prevent non-payers from making calls.
Xiaomi, which also leverages partnerships to provide loans, said it was a key growth driver for sales of phones above Rs 15,000 and said it would explore more such services. Murali Krishnan said Xiaomi would also open more stores beyond its existing network of 20,000 retail partners and promote local sourcing of phone components, which could help reduce costs.
Some industry analysts said the new strategy could help Xiaomi resume solid growth in India. “Xiaomi has historically had strong brand equity, with strong online and offline channels, and is poised to make a comeback with a strong portfolio of premium and value-for-money products,” said Prabhu Ram, head of industry intelligence at CyberMedia Research.
