Even as attempts are made to lower the consumption of Chinese products in India by a section of the population, Xiaomi said it has sold 50 lakh units of Redmi Note 4 smartphone in India in six months.
A total of 100 mln smartphones are expected to sell in India in 2017, and going by the run-rate, the Redmi Note 4 alone could have a 10% market share in that.
The phone started selling on Jan 23, and continues to remain out of stock due to the insatiable demand for the affordable, yet high-speced phone.
The phone symbolizes the success of Xiaomi’s unique marketing strategy.
The company designs a phone that has most of the features that an average smartphone buyer would want to buy. It then prices the phone slightly below cost, betting on an expected decline in component prices in the months that follow.
Due to the pricing strategy, its models immediately become famous as the most value-for-money, and this leads to enormous word-of-mount publicity and demand generation without advertising.
Moreover, the company takes care to come up with only one model in each segment — entry level, mid range and high end.
This helps it in two ways: First, it helps cut down on research and development costs. Secondly, it helps the company produce and sell millions of units of each model over a period of around 8 to 10 months.
The focus on a single model also helps the company put in long-term orders for each component, such as LCD displays.
Unlike other manufacturers, who place orders for 1 or 2 months, a player like Xiaomi can place a component order for 10 months, which helps it bring down the cost of the part, and therefore, the overall device.
On top this, the company does not invest in building huge factories to keep its costs down.
Instead, the focus is on keeping its manufacturing facilities engaged and working at their full potential throughout the year with zero down time.
The company’s marketing strategy has also ensured that it doesn’t have to invest money in advertising, except in the last leg of the product’s life cycle when demand starts flagging.
The company, along with Vivo, Oppo and OnePlus — all three of which are apparently owned by the same Chinese billionaire — have managed to destroy most of the smaller brands that used to dominate the mobile phone market in India.
Apart from Intex and Itel, none of the smaller brands — such as Lava, Xolo, Micromax, Spice and Karbonn, have been able to grow or even maintain their market share in recent quarters due to the entry of the Chinese players.
Meanwhile, increasing military tension between India and China, with the Chinese Army moving more and more soldiers towards the Indian border, has threatened to cast a shadow over the success of brands like Xiaomi, Vivo and Oppo.
Indian consumers support millions of jobs in China as they consume about $58.33 billion (Rs 3.77 lakh cr) worth of mostly finished goods every year.
India, on the other hand, exports only about $11.76 bln worth of goods to China. Moreover, these items do not typically generate many jobs in India as they are mostly raw materials such as iron ore, cotton and so on.