Enjoy your India moment, Xiaomi, it might not last
Xiaomi Corp. is going to double down on India. Literally.
Chairman and CEO Lei Jun sat down with Bloomberg’s Saritha Rai and Jason Gale in Bangalore this week to explain how he plans to resume rapid growth. The Chinese smartphone maker will spend $500 million in the country over the next three to five years, after spending a similar amount since entering India two years ago.
Right now is the perfect time for Xiaomi to make a claim of renewed vigour. It came in second by share of the Indian smartphone market in the fourth quarter, topping all local and international competitors except Samsung Electronics Co., according to IDC data.
One great quarter does not a renaissance make, however. Almost 40% of full-year sales came in that single three-month period, according to IDC. That’s not necessarily unusual, because the Diwali shopping season falls in the quarter, but it should be noted that Xiaomi’s share climbed as much because the entire market fell as because of its own growth.
Xiaomi’s 2016 India smartphone ranking
IDC notes that the higher-priced smartphone segment actually expanded during November because demonetisation saw many customers rush to offload cash. It’s likely Xiaomi was a beneficiary of this, given that it sells premium devices compared with local offerings.
For the full year, Xiaomi placed fifth, selling around 7.2 million units. That’s still an impressive 119% growth, according to IDC, but it’s coming off a low base. What should worry Xiaomi is that its old nemeses are approaching fast. Compatriots Oppo and Vivo were just a few percentage points behind in the fourth quarter and they have more growth momentum, again because they’re coming from a low starting point.
What’s really seeing renewed vigour is the feature-phone market. The addition of 4G and increasing functionality, coupled with lower prices, has kept this older category relevant. HMD Global reviving the Nokia brand, a popular name in India, adds to the reasons why feature phones will again outsell smartphones this year, and delay migration up the product value chain.
In summary: You’ve got competitors closing in fast, demonetisation possibly providing a single-quarter boost, and feature phones remaining a competitive threat. If there’s a time for Xiaomi to assert that rapid growth is ahead, it’s now. They may not be saying it again for a while. Bloomberg