Chinese phone maker Xiaomi Wednesday said it will take a decision on price hikes for its smartphones after evaluating the impact of rupee’s slide against the dollar.
Xiaomi, which is a leading player in India with about 30% share of the country’s smartphone shipment, has launched three new models of its Redmi devices that take into account the recent fall of the rupee against the greenback.
“The prices (of phones launched) do take into account the impact...the rupee is at about 71, it takes into account that. This is an introductory price with Diwali coming up. Post that (Diwali), we will evaluate," Xiaomi India Head (Category and online sales) Raghu Reddy told PTI.
He explained that manufacturing locally in India helps in this situation as supply chain efficiencies allow passing on the benefit to consumers. However, a large part of the components are paid for in dollars as they are bought from suppliers from locations like Japan, Taiwan and the US among others. “As the USD continues to strengthen, your costs go up," Reddy added.
While he declined to comment on the quantum of impact on the manufacturing cost, Reddy said the company will have to evaluate its entire portfolio and take a call on whether prices need to be revised.
The rupee Wednesday pared initial gains of the day to drop to a fresh all-time low of 71.96 against the US currency, falling on sudden bouts of dollar-buying by banks and importers.
The dollar has strengthened against a basket of currencies overseas as the US economy continued to exhibit strength amid a lingering threat of escalation in the US-China trade conflict, leading to a fall in the domestic unit.
Interestingly, Xiaomi has previously stated that the company will keep its net profit margin at under 5% to earn the “long-term support" of its customers. Large volumes with small profit margins, it had said, result in “suitable hardware profits" for the company in the long term.
India is among the largest smartphone markets globally. Shipments grew 20% to 33.5 million units in the June quarter of 2018 over the year-ago period. Xiaomi grabbed the top spot with 29.7% share, followed by Samsung (23.9% share) and Vivo (12.6% share), according to research firm IDC.
Xiaomi Wednesday launched Redmi 6, Redmi 6A and Redmi 6 Pro priced between ₹ 5,999 to ₹ 12,999. This range is also among the most competitive segment in the booming Indian smartphone market. All the three models will be manufactured in India.
The Redmi 6A succeeds Redmi 5A, which saw more than three million units being shipped in the second quarter of this year. “At Xiaomi, we believe in making innovation accessible to all our users at honest pricing. With the only smartphones in its segment with 12nm architecture - we hope Redmi 6A and Redmi 6 will be worthy successors in the market with their performance," Reddy said. He added that Redmi 6 Pro, which features AI dual camera, provides the highest quality in its category.