How Xiaomi Is Planning To Cut The Cost Of Its Products In India

Chinese phone manufacturer Xiaomi is actively discussing with two component partners as they want to build factories to support the company’s growing operation in India, its phone business in particular where the company has pretty much been the leader in the market.

According to Xiaomi India’s managing director, Manu Kumar Jain, Xiaomi has been in active discussions with 2 other partners for producing several components, but they haven't made the final decisions yet.

Besides reducing the go-to-market time, the components’ local sourcing can be a great help for the Chinese phone maker to reduce its products’ price in the Indian market.

The Chinese phone maker has been trying to bring the company’s all component ecosystem partners to the country. Earlier in the year, the company had already brought more than fifty of its partner in the supply chain from Taiwan and China to India to evaluate its opportunities for building local factories.

These component suppliers came to Uttar Pradesh and Andhra Pradesh as they wanted to explore opportunities for investment. Xiaomi had stated that these suppliers could put potential investments of up to $2.5 billion which is around Rs. 15,000 crores in the country within the next couple of years and could provide 50,000 jobs.

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One of the biggest suppliers of Xiaomi, Holitech Group, is reportedly building a facility with an area of 75 acres in Tirupati, Andhra Pradesh with $200 million (Rs. 1,400 crore) investment in the next 3 years, to produce flexible printed circuit, camera module and thin film transistor, fingerprint module and touch screen panel just for Xiaomi.

The Indian Cellular and Electronics Association stated that producers of mobile component, PCB assembly, and others are likely to invest around $1.5 to $2 billion (Rs. 10,500 to Rs. 14,000 crores) for this fiscal year.

Xiao has already had 6 facilities for manufacturing smartphones and 1 facility for producing power banks spreading across Tamil Nadu, Andhra Pradesh and also Uttar Pradesh. It just started Surface-mount technology (SMT) plant collaborating with Taiwanese company Foxconn, to start PCB or printed circuit board in Sriperumbudur, Tamil Nadu.

Jain said that Xiaomi is also searching for startups or strategic partnership or investment to set up a complete around the company’s products and services.

So far, Xiaomi has already invested in over ten startups in India through its corpus of $1 billion announced in late 2017 by Lei June Xiaomi CEO. The company has a plan of investing $1 billion in 100 startups in India over the next 5 years to build an app’s ecosystem around its phone brand.