Chinese smartphone maker Meizu Technology, in which e-commerce giant Alibaba is a minority stakeholder, on Wednesday entered the Indian market with the launch of its latest smartphone MX5 for Rs.19,999 on Indian online retailer Snapdeal.
The company’s entry in India can be credited to Alibaba. It was only after Alibaba invested $590 million in Meizu this February and introduced it to Snapdeal (in which it has a roughly 4.27% stake), that Meizu firmed up its India plans, said Li Nan, vice president-marketing, Meizu Technology in an interview.
The company, which competes with Xiaomi Corp. in China, sees India as its next big market. Meizu also has plans to manufacture phones in India, and is currently in talks with contract manufacturer Foxconn to start production in Chennai, said Li. Edited excerpts:
What brings you to India?
India in some ways similar to China market, the foundation is the same—it prefers high speed, high performance products over high price products. We have done this in China, so we can do this in India because it is what we do best—balance quality and price. In India, people are shifting from feature phones to smartphones. In doing that, first they go for low-end smartphones, but 12 months later they shift to better, higher priced and higher performance smartphones. We have seen that happen in China. Next 12 months they switch to third smartphones not for high performance, but for good design and some kind of user experience function, so the third smartphone will be that kind of phone—and we sell that kind of phone. We are putting together 15 people team in India. In China, we are one of the best smartphones in this price range. In India, we can do the same thing.
What are your plans for India?
Meizu is our brand that serves our customer base in China. We want to do the same with India. Product is one of the service for our customers and after service is another service. We have (already in place) 40 service centres in the top 20 cities (in India), half of which are owned by us (and the rest by third-party service providers). We will take that to top 50 cities. Another thing we are trying to make sure is that we can make smartphones in India. So we are talking to Foxconn to start production in Chennai this year. The deal is almost finalized, though it has not been closed yet. We plan to start (in the next six months) with the product MX5 that we launched today. We are not focusing on numbers right now, we are looking for 90% customer satisfaction in India.
For now we launch our product first in China then in India after three months. (We want to reduce that time.) Instead, we want to launch every product that fits India market at the same time as China launch.
What plans do you have for e-commerce segment in the country?
Alibaba works with a lot of web services companies and they want to build some kind of India app and web service provider to gather all the local apps and web service. We will integrate that platform in our smartphone in the future. It will be like Google Play Store. In China, we have had big success because we integrated a lot of web services directly into the system so that users can directly pay money. Similarly, we will work with Alibaba to do that in India, integrating payment service on the platform, while providing localized services for Indian customers. We are working with Alibaba, which is working with Snapdeal and other web services company.
India is a pretty crowded market already with a lot of homegrown as well as Chinese vendors. Don’t you think you are late to the market?
Meizu is a completely different company. We have 12 years of experience. We have had a lot of achievements and a lot of failures. And finally, we found we must believe in our product and we must ensure that we shape the best products. We have very good supply chain around the world, we can gather the top service providers for our products and make e-communication with our users every day. In India, it is not time to target market share, but we have to make sure first that we can service our customers really well and create a good communication with them.
What are challenges that you see in India market?
Most challenging is to find our early adopters. At present, we have about 4,000 customers through our sale on Amazon.com in May. We sold 4,000 phones in four minutes.
When did you decide to enter India?
Since last three months, we have been preparing to launch in India. All the countries are different so we had to hire local people first. We talked to customers and found customer service centres were the most important thing. In last three months, we have talked to lot of third-party services and a supplier from China which has a full repair factory. Alibaba investment earlier this year in the company did help us make this decision.
How do you plan to get traction in India?
What customers care about is not your brand but the product. In China, we have very strong social network power because if they ask us to modify something, they get the results. Social network will talk about our product. (We plan to) put product and marketing on the social network. That’s the first stage. In the longer run, we may go for offline approach as well.
What kind of approach will you have—online or offline or a mix?
We will first be offering it online on Snapdeal, this will save a lot of cost on marketing. If we find some very good distributors, we will consider opening offline stores as well. We have many retail shops in China, but we need to choose carefully our offline distributor network that can provide happy experience. We need some kind of balance.
What kind of operating system (OS) are you running?
Our OS is name Flyme OS—it is modified from Android Lollipop. Android is a very good operating system, but we know, we match our customers better than Google. Google serves too many customers so they cannot do so many communications, but we have seven million users who talk to our engineers every day. So we can offer highly customised and optimised OS based on latest Android features that matches our customers very well. We want to do same thing in India and find a true need of Indian customer. So, we are putting together a team specially for India.
Will you look at smartphones with Alibaba’s OS YunOS?
Alibaba developed its own Android-based OS, YunOS, and was working with Taiwan personal computer giant Acer to develop a phone with the system to promote its e-commerce services in 2012. But Google objected to Alibaba’s Android variant, and ultimately pressured Acer to abandon its plans to produce the phones, Forbes reported. Since then, no major manufacturer has dared to defy Google and make phones using the YunOS, the report said.
Alibaba has a big presence in India. Based on the user feedback we can consider bringing smartphones with Alibaba’s OS YunOS with localised content.
Google is not very happy when companies make their own OS.
Customer is always right. All the customers I have seen (want) customised products.
What is the estimated investment that you are looking at?
Investment in India is possible. Alibaba is doing the same in India. It wants to make sure that it gets smartphone companies and integrate well with them.
Will you be open to acquisitions in India?
It is possible, but we have to find our audience first and understand what they need.
Chinese vendors, including Oppo and Coolpad, entered in India earlier this year, yet they haven’t been able to make a mark yet. What is it that you are doing different?
The good thing is that we can beat any other Chinese smartphone company in China’s market based on our product and our service. In India, we are now not that good at those kinds of thing, but we have to make sure that we give best product, service and communication. If we can have that we will have an advantage over others.