In-Store And In India

Xiaomi, a Chinese smartphone comet online, had to broaden its retail base. Manu Jain is helping to pull that off.

- Anuradha Raghunathan

Chinese phone maker Xiaomi started off its pre-Diwali sale in India this year on a high note—selling one million phones in 48 hours in September. It was a reminder of how potent the online marketing channel can still be for a company that lit up its home market that way three years ago.

But the company’s luster had faded in the meantime. The bigger story for Xiaomi in 2017 is how it is using bricks and mortar to regain momentum. And India, its second big market, is in the forefront of that effort.

For the first half of 2017, Xiaomi was the first runner-up in the country’s smartphone segment, after Korea’s Samsung (see table, p. 25).

Globally, this matters: India has the second-largest smartphone base after China but still has only 300 million users against China’s 710 million. Although China remains a key battleground, its market is getting saturated. Hence, ever more competitive Chinese brands are assiduously wooing Indian consumers. In that first half of 2017, they combined for a 54% share.

“We’ve been able to bring really high-end, high-quality products and make them affordable,” says Manu Kumar Jain, 36, who heads Xiaomi India and is a global vice president. “Phones with similar specs—for the price ranges that we offer—will cost double with a competitor.”

Xiaomi, which entered India in 2014, is looking for revenues there to exceed $2 billion for 2017—doubling from last year. (Margins are wafer-thin, but the Indian subsidiary has been profitable since 2015.) Overall sales should pass $16 billion.

Jain’s operation has running room—India’s $19 billion market (wholesale smartphone revenues) is expected to cross $30 billion by 2020. Closely held Xiaomi may still sell three times as many phones in China, but India is its best hope for gains that might at last unlock its IPO opportunity.