Xiaomi’s Tata coup: What it means for India
Chinese smartphone giant Xiaomi has been given a big boost in its drive to expand its footprint in India. Hugo Barra, Xiaomi’s global vice president, announced in a Facebook post on Sunday that Ratan Tata, chairman emeritus of Tata Sons, has become an investor in the Chinese company.
“We’re really excited to announce our newest Xiaomi investor — Mr Ratan Tata, chairman emeritus of Tata Sons," Barra said, adding that Tata would play a role as an adviser for the Chinese start-up. “We're incredibly honoured by this extraordinary vote of confidence. Mr Tata is very excited about Xiaomi and our plans for India, and we're really looking forward to working with him as an investor and advisor!"
The announcement follows last week's India launch of the Xiaomi Mi 4i exclusively for the India market - the first launch outside China for the company, underlining its bet on India. Founder and CEO Lei Jun, who doesn’t often travel overseas for Xiaomi’s global affairs which are handled by Barra, travelled to India and accompanied Barra at the launch event. Tata’s backing, CEO Lei Jun said in a statement, was “an affirmation of the strategy we have undertaken in India so far”.
Xiaomi’s success in India is all the more striking as few Chinese brands would have imagined not only penetrating the Indian market so rapidly – considering the many obstacles and perception challenges that brands from China face – but developing what Barra often describes as a “hard core” Indian fan base, evinced by the turnout at the recent launch. Xiaomi has also managed to avoid the controversies that have surrounded the entry of other Chinese companies in the Indian market like Huawei. For one, because it has smartly positioned itself as a young, innovative start-up - the antithesis of a powerful tech company that handles massive contracts for governments.
This image has also resonated with young Chinese, as I found out when I attended the January launch of the Mi 4 in Beijing, that had college students travel to Beijing from provinces from around the country. The company's innovation department says its in a constant dialogue with users, to the point where updates for some devices, such as the Redmi Note which I had been using until recently, were being rolled out literally every week (perhaps tiresome for lay users but a dream for the geek squad).
The company in February became China's biggest smartphone vendor, surpassing Apple and Samsung, according to research firm IDC, with its price-competitive phones increasing market share in the past year from five per cent to around 12 per cent. Last month, another research firm report said in the 4G handset category in India Xiaomi had overtaken Apple and Samsung in January, and is now among the top five selling smartphones in India.
Over the past year, Xiaomi has scored big with its recent launches in India - most notably the Mi 3 and the Redmi Note - which were sold out within minutes on Flipkart, with which it has a tie-up. The company is now preparing for the next step, aiming to broaden its base by launching an India dedicated website and considering setting up research and development centres as well as service centres in India. Xiaomi is here to stay.