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Xiaomi to start making phones in India after it struggles to match consumer demand


Chinese smartphone manufacturer Xiaomi plans to start making its smartphones in India, reports The Times of India. It says Xiaomi is currently on the lookout for partners for this initiative.

This will be similar to the company’s China model wherein it will design both the hardware & software of the smartphone and partner with companies to assemble the device. In China, Xiaomi works with Foxconn for this purpose.

Xiaomi’s VP of International operations Hugo Barra told Bloomberg that production in India will likely begin in a year or two. However he didn’t disclose any specific details on where they intend to setup this manufacturing facility.

TOI suggests that Xiaomi is exploring Nokia’s now defunct Chennai plant as a possible India manufacturing hub. However, Xiaomi’s India GM Manu Kumar Jain told the publication that they haven’t yet looked at Nokia’s Chennai plant. Readers will remember that Nokia had shut down its Chennai plant earlier this month, following the termination of manufacturing contract by Microsoft.

Will they finally meet demand?

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It’s worth noting that Xiaomi has been struggling to match the demand for its Mi handsets in the country since its India launch earlier this year. Barra told Bloomberg that they were initially shipping 50,000 devices to India per week which has now shot up to 200,000 devices per week. This exponential growth in demand has meant that Xiaomi had to charter flights four times over the past two months to ensure delivery as per schedule.

To address the demand, the company had also strangely adopted a single device strategy in the country, wherein it focuses on one device at a time and discontinues the sales of previous handsets.

It had earlier discontinued its previous flagship smartphone Mi3 to focus on its low-cost RedMi 1s in August and the company is now apparently discontinuing RedMi 1S from next month to focus on the recently launched RedMi Note. We wonder whether the company intends to discontinue RedMi Note when it launches its flagship handset Mi 4 in India in Q1 2015.

A local manufacturing facility would allow Xiaomi to increase its handset production and address the existing demand for Mi handsets in the country. This will also enable Xiaomi to reduce shipping costs and be more aggressive in pricing its handsets.

Interestingly, this move comes at a time when the Indian government is encouraging local manufacturing in the country through its ambitious ‘Make In India‘ initiative. Earlier this year, Micromax also started manufacturing tablets at its India plant.

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Plans to invest in Indian startups: Barra also told PTI that they are looking at investing in startups. The company is apparently looking for possible investment opportunities in Bangalore and Delhi-NCR right now. Barra said the focus is currently on mobile apps which can be integrated to improve the product experience.

While he didn’t disclose any specific details on the amount they intend to invest, Barra mentioned that they typically invest anywhere from “$100,000 to millions of dollars”.

Data center plans: Last month, Xiaomi had revealed plans of setting up local servers in India & Brazil in 2015, after privacy and security concerns were raised against Xiaomi for sending sensitive user data like text messages, contacts, phone numbers, ISP’s name and IMEI numbers among others to the company’s server in China. These allegations were denied by Barra and he also informed that the company was migrating MIUI services and corresponding data for all its International users (including Indian users) from its Beijing data centers to Amazon AWS data centers in Oregon (USA) and Singapore.

Also readCan Xiaomi’s sub-$200 RedMi Note 4G improve 4G adoption in India?

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