Xiaomi Leads Chinese Invasion into India, But the Honeymoon is Ending?

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July 10, 2015 by ...

Chinese handset makers are slamming the Indian market. They’ve increased sales by 2014% for the quarter when compared to last year. This equated to an increase in market share to 12% versus last year.

Xiaomi played a key role in this due to value-for-the-money phones. Price was a major issue and its estimated that by 2019 phones selling for less than $100 will account for over 51% of the market.

Another factor was India’s increasing desire for bigger phones and/or phablets. Compared to western countries, Asians love large screens. In places like Taiwan and parts of China, phablets and mega size phones are purchased as often as smaller devices. Koreans are even more ‘size conscientious’ and rarely buy teeny cells.  

Previously India was more like the west, eschewing screen real estate for convenience. This is changing and at last count over one-quarter of their phones are large screens or phab-sized. Obviously, this played into the hands of Xiaomi, Oppo and others.

For less affluent consumers phablets play a dual role. They are a phone but also iPad/PC substitute. Lacking funds for such devices, they merely buy a large phone.

The honeymoon could be drawing to a close, at least for Xiaomi. In an attempt at expanding its market it has to invest in things like advertising, and build a war chest for future IP theft litigation. This has caused them to change tack and start selling at mid to upper-mid range prices.

This strategy is a dangerous one, as and India a testament to this. Newer and higher priced Xiaomi phones no longer fly off the shelves. In fact, they sit in stock, their market value decreasing by the day. After all, it’s cool to get an iPhone clone at a 75% discount but that has changed.

Xiaomi is pricing models at the same prices for which lower end Apples and Samsung’s can be had. For a lot of consumers it’s better to get 8 month old phones from design and technology leaders, than to invest in a facsimile.

Things could change, but for now it seems that the market has spoken. Xiaomi phones are great, as long as they sell for a fraction of the price of the big boys. If the mathematics change, so does consumer behavior and the market responds with, “No thanks Lei Jun, but your phones are not ‘for Mi’ ”

 

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