How can China’s Xiaomi succeed in India’s mobile market?

A few weeks ago, Chinese phone-maker Xiaomi said it’s weighing up launches in India, Indonesia, and a few other Asian markets. There’s no fixed date yet, but it’ll be an interesting development from the standpoint of the fast-growing Indian smartphone sector.

44 million new smartphones were shipped in India last year, and so Xiaomi will find strong competition in the country. While Samsung’s smartphones lead in terms of new sales, the Korean giant is hounded by homegrown brands Micromax, Karbonn, and Spice. You can also throw the likes of Apple’s iPhone, Nokia, LG, Sony, and BlackBerry into the mix.

The Indian mobile market offers huge businesses opportunities for growth, but not without immense challenges to survive and become successful.

Despite strong local brands, a lot of the Indian market is still up for grabs with most people still on feature phones. It’s hard to say how many active smartphone and feature phone users there are in the country, but IDC says that 78 percent of phones shipped in India last year were feature phones. With rising income levels, more of India’s 900 million phone subscribers – mostly prepaid users – will improve their mobile experience by getting a smartphone.

Those will mainly be budget smartphones – which is Xiaomi’s speciality.

Are you ready for online sales?

But before we ponder the prices, can Xiaomi succeed with its preference for online sales? It’s working well in China, though proving controversial and apparently frustrating in Singapore. However, is India ready to buy gadgets online directly from the phone-maker?

India’s ecommerce industry is younger and less widespread than China’s. Nonetheless, it’s growing well. India’s online shoppers spent $16 billion in 2013, and the top estore, Flipkart, just exceeded $1 billion in sales in a single year, and it did so ahead of its 2015 projection.

Motorola has already tested the waters in India. Motorola is selling the Moto G exclusively on Flipkart, selling out its first batch in less than an hour.

Learning lessons from others

It’s a successful case that Xiaomi can consider in India. With more and more young people going online via their mobiles in urban and semi-urban areas – forecast to hit 185 million by June this year – those are all potential customers for Xiaomi’s affordable smartphones.

Price battle

A billion challenges