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Xiaomi’s Manu Kr Jain on game plan for growth and the challenges faced

Q1: Welcome to the Morning Show. Last year has been topsy-turvy for mobile devices primarily because of shortage of chips and all that stuff. How did the market behave for you? What were the challenges and what were the various phases you had to go through, last year?Ans:

  • Last two years have been the toughest professionally
  • Experienced worst supply chain disruption last year
  • Manufacturing in India depends on raw materials coming from different countries
  • Keeping the 15,000 retail partners motivated was a challenge during the pandemic

Q2: In the Q4 your market share fall had been pretty sharp. Is the competition toughening up or what is the reality on the ground?Ans:

  • Fall in market share (in Q4) was the result of supply constraint, and not competition
  • Last few months have been traumatic in relation to chipset supply and other supply chain constraints
  • Fall in market share for a few quarters is fine, provided the company is on right trajectory from the long-term perspective
  • Covid, supply constraints etc triggered a demand and supply imbalance in connected devices segment
  • Industry expects this imbalance to go away by the middle of this year, driven by local manufacturing, robust supply chain and improvement in chipset supply

Q3: One advantage that you have with Foxconn is that they also have a PLI, which BYD and others do not have. Does that give you the option of looking at exports?Ans:

  • Want to make India the manufacturing hub for connected device
  • Want to export, but the short-term focus is to cater to the domestic demands
  • India is one of the fastest-growing markets in the world for smartphones and connected devices
  • Presently, the company is investing its time and energy into streamlining the supply chains

Q4: You talked about premiumisation of your mobile phone strategy, which (the Rs 30K+ category) today is dominated by OnePlus and Apple. In this market, how do you compete with the Rs 80K+ top-of-the-line segment, which is virtually dominated by one player, though Samsung has one or two products in that range?Ans:

  • There are more than just two brands that have done well in the top-of-the-line smartphone segment
  • Xiaomi disrupted the smartphone industry in India after its launch
  • Xiaomi didn’t focus on the premium market because when it entered India, the average selling price (ASP) of smartphones was Rs 5,000 to 6,000
  • ASP of smartphones in India is around Rs 14,000 to 15,000 today
  • Smartphones above Rs 20,000 price segment is considered a mid-premium market in India
  • After ASP of smartphones went up above Rs 12,000 and share of devices above Rs 20,000 price segment has crossed 10-12% of the market, that’s when Xiaomi turned its focus on smartphones of the range Rs 20,000 to 50,000 and above
  • Xiaomi’s growth in the Rs 20,000 to 50,000 smartphone segment was about 7x, from its small base

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