Interview With Manu Kumar Jain, MD, Xiaomi India On The Company's Plans In India
Only three years after entering the Indian market, Xiaomi is now biggest smartphone vendor in the country with 27 per cent market share.
Xiaomi sold 9.2 million smartphones in Q3 of 2017, it was also India’s fastest growing smartphone brand with an increase of 300 per cent (year-on-year). Total share of Xiaomi in India 23.5 per cent (Q3).
What’s impressive with Xiaomi being on top is that Xiaomi sold 90 per cent smartphones online in a country where 70 per cent phones are sold offline. Fifty per cent of the smartphones sold online are Xiaomi smartphones.
Manu Kumar Jain has been leading Xiaomi India since 2014 and the company has achieved a huge success which also results in Xiaomi becoming the world’s fifth biggest smartphone vendor.
BW Businessworld spoke to Xiaomi India Managing Director, and Global Vice President Manu Kumar Jain about his journey with Xiaomi. Edited Excerpts:
How did you establish this position in such a short span of time?
The most important factor that Xiaomi tasted success in a short span of time is our great products at amazing prices.
For an example, we recently launched Redmi 5A at Rs 4,999 which can easily beat other handsets at the price of 8-10k. If we compare this handset with the Samsung’s best-selling handset J2, Redmi 5A is a better phone at a much lower price.
We do a lot of innovation on both software and hardware side and give it at an amazing price which is the fundamental reason of Xiaomi’s success.
The second reason of success is the Mi Fan Community, we have been able to cultivate this Mi Fan Community which has more than 2 million active members. There are 20 Mi Fan clubs across different cities and these people are our brand ambassadors. Lot of the features from hardware and software perspective are built on feedback which we got from Mi Fans.
Third factor is our investment in India, we have invested in three different factories and opened in 750 service centres the country.
The fourth factor is definitely our team, we only are a team of 300 people and they all come from a very different background. A lot of them don’t have any background of smartphones but they are just inherently smart people. We actively encourage our team to spend time on social media to follow the trends and consumers’ desires.
We look at potential rather than experience, the head of our retail business that is Mi Homes has no experience of retail sector.
We are a design hardware and software then buy components. Later we give it to the manufacturer to assemble the phone.
What features do you primarily focus in phone before launching it?
Most of our phones have been all-rounder phones which were not focused on any particular feature, they had great of everything in that price point. Our last year’s top selling smartphones were Redmi Note 4, Redmi 4, and Redmi 4A, respectively. All of these smartphones had best RAM, Camera, Storage, battery and processor in their respective price ranges.
We saw a huge trend of people clicking pictures and putting it on social media. Now we are beginning to make few phones on a particular use case, especially camera. Like Mi A1 was specifically focused on rear camera, then had the launch of Redmi Y1 which is a selfie-focused smartphone. We are coming up with new use cases like Redmi Y1 and Mi A1 which are camera focused phones.
Most of the features we bring in our phones were not incepted from us, most of the ideas come from our Mi fans who give very active feedback about the features that we should bring in our phones.
How has the Make In India Initiative helped the growth of Xiaomi in the Indian market?
We announced our Make In India plans in January 2015 and this is before government had announced tax benefits. Govt. announced tax benefits in March 2015. The reason we wanted to make in India was because we had one of the leanest cost structure in the world. We have leanest manufacturing, distribution and leanest Just in Time (JIT) no working capital cost.
We said when we import from China- our lead times were much longer and I had to hold inventories for many weeks which was a huge cost for us; for a company which works on waivers than margins. So we said when we start manufacturing in India- that lead time reduces and I can save all that working capital costs. Also, we wanted to increase our supply and in order to reduce our working capital we started planning to make in India.
Within six months, we launched first manufacturing unit at Andhra Pradesh and by August it went live and last year second factory at Andhra Pradesh went live. Also, two months ago our third factory at Noida went live. The third factory is for power banks and maybe in the near future we will make other products like Mi Bands in India. So we have two manufacturing units for smartphones in collaboration with Foxconn and one for power banks with Hipad.
It helped us in many ways- better supply planning, reducing working capital and tax benefits. It also helped us to invest in Make In India which created more employment opportunities.
We are working on three more things- we are trying to convince more partners to establish their units in India like Foxconn and Hipad did. We are also taking to our existing manufacturing partners to establish more factories in India.
We are also convincing our component suppliers like battery guy, screen guy and chipset guy. The aim is that in the next few years.
As the smartphone market in India is 70 % offline and 30 % percent online. You are selling 80 per cent phones online. So, In the near future are you going to flip the split of your online and offline business and focus more on offline?
At the beginning of this year we were selling 95 per cent smartphones online an only 5 per cent through offline channels. The aim is to touch 30 per cent offline and 70 from online and we are very near to that.
For Mi Home there is no distributor and for Mi Preferred store, there is a distributor in every city. With other brands, there is a national distributor, then state and then city level distributor and then the retailer. We directly give the products to city distributor who gives it to the retailer. We are currently present in fifteen cities in India and we will take that number to hundred by the end of this year.
Xiaomi is a very strong player between the 10k to 15k price range with a variety of devices. Are you going to launch more handsets in other price ranges?
In 2016, our key play was between Rs 7 to 13 thousand and we only had one phone at 25 grands that was Mi 5 but that 15 to 25k was completely vacant. If we look at 2017, we have launched eight phones- which is a very big number for us. Earlier we used to launch only 4 to 5 phones in an year so eight is a big number for us.
In 2017, we have expanded both ways, on one hand we went lower at 5k and tried to expand the market. On the other hand, from 13k, we went from 15 to 20k with the launch of Mi A1 and Mi Max 2. We also launched a phone at 35k- the Mi Mix 2, which we had never done before.
So, we are trying to move both ways, going down and going up in the segment. Now that we are the dominant brand in the 7 to 13 grands, we are trying to take it in both the directions.
For Mi A1, What made you partner with Google for the stock Android, over MiUI? Are we going to see more Xiaomi devices with stock Android?
MIUI is still our core product and we are still developing more features for Indian users. What we realised was that a lot of Indian smartphone users prefer stock Android. We are a startup company so we realised why we don’t experiment this and launch a phone with stock Android instead of MIUI.
Then we partnered with Google and launched the Mi A1 on Android One platform and this phone is a huge success for us. We are monitoring this partnership with Google very carefully and we are open to it- the idea of launching more phones with stock Android.
Why wasn’t the Mi 6 launched in India? Will you launch the upcoming flagship handset Mi 7 in India?
The only reason Mi 6 didn’t entered India was due to bandwidth issues, we are still a pretty small team which are doing everything like marketing, logistics, customer services and after sales services. For us every time we launch a phone, it is a three month cycle. Even though all the R&D happens in China but we have to lab testing, field testing, beta testing with Mi Fans then we do internal testing with the team.
Launching a phone looks like an easy process but there are a lot of efforts which our team makes to bring the device in the country. We are already launching eight phones which means we have doubled the number from previous years. So that’s why we couldn’t launch Mi 6 in India.
I am not promising this that Mi 7 will be launched in India, it depends on our portfolio and our bandwidth. We are launching phones as much as possible but we can’t bring everything to India.
What were the aspirations you had after you started selling smartphones in India?
In mid-2015, I had a meeting with the co-founders of Xiaomi to discuss some plans. A question was asked to me that “how long will it take to become the number one smartphone company in India”. We don’t chase these numbers but there is an aspiration that we have.
I said yes we can become number one in India. Later we discussed by when is it going to happen. My answer in mid-2015 was probably in best case scenario by 2019 or 2020. So, I said 3 to 5 years from now and we agreed that it will be a great thing to achieve by 2019.
One thing we always focused was input and we have always believed that if we do everything right from the input perspective, the outcome will obviously be good. This was a good aspiration to have but we are much ahead and already achieved that in India. We have significantly over achieved what we aspired back then. But we have not achieved the full potential yet and there is a long way to go.
What is your vision for Xiaomi India for the next two years?
Even though we are the number one smartphone brand in India but I think we haven’t achieved our full potential yet.
In two to three years we will achieve our full potential. We will be able to launch a lot more products other than smartphones. There are still 400 to 500 million people who use feature phone users in India, I hope we will be able to bring them online through smartphones. These are the people who will never use a computer and the smartphone is the only way for them to become digital.
People want latest technology in the affordable price range, features like bezel less display and dual cameras should not be limited to premium smartphones. In 2018, I hope smartphone companies will be able to offer the latest tech to every smartphone user in India not just in the premium smartphones but in the affordable segment too.
2018 will be the year where all the latest trends are available at an affordable price.
You are a very successful man at this young age, what drives you to work hard?
What really drives me is the feeling of making an impact and success for me is not just making money. When people die, they are remembered because of the impact they had made on the society.
Doesn’t matter at which level you are or what work you do, it feels good to be remembered for something good. When you go somewhere you should be recognised for something good is what drives me. It really motivates me when I meet some fans or I go to villages.
Do you have any future plans of becoming an Entrepreneur?
I don’t have any plans to go back to entrepreneurship, I am having great fun at Xiaomi.
My job at Xiaomi is almost like in between, I won’t call my job at Xiaomi as pure job, it quite similar to entrepreneurship. We build business in India almost like a startup. I was the only employee for the first three months and for first two months I did not even had an office. My first office was a six by four feet and I used to open the office myself.
It had happened many times that I am serving tea to the investors in the meeting and I used to talk about deals worth hundred crores. The investors used to look at me like I am talking about a Ponzi scheme. They used to ask me that how big is your team and I told them I am the only person.
Many people rejected to work with us, they thought I am selling a Ponzi scheme and will run away with their money. It was almost like a startup- the way we entered in India three years back. So, I have worked like an entrepreneur in India.
What made you leave Jabong and join Xiaomi?
There were many small reasons but the biggest reason was my personal life, my wife was in Bangalore and my Jabong office was in Delhi. Four years ago my kid was born and it was the most amazing moment of my life. Then I realised that I have to spend more time with my family. I spoke to my co-founders that I want to move in Bengaluru but it was not possible because our entire Jabong team was Delhi based.
So I had to take a call and I decided to move to Bengaluru.
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