Xiaomi Plans To Manufacture Phones In India


China’s Xiaomi Inc. might want to manufacture their smartphones in India, inspired by its flash sales on shopping site Flipkart.com, but industry experts agree that could present some tests. The main problem: The subcontinent’s high-tech engineering set-up may not be up to par.

Xiaomi’s victory in India, from an initial sales assessment of 10,000 handsets a week to an unpredicted, wildly successful 100,000 a week, in just 4 months and 8 flash sales, has left the company speculating if it should manufacture there.

Missing Ecosystem

Making the module supply chain required to produce these kinds of smartphones in India would take a lot of organising and besides, there is no model for such a smartphone being built in India from scratch.

In January, a wide-ranging report on India’s electronics market potential and local manufacturing openings was released by the India Electronics and Semiconductor Association, an industry lobby.

The effort had the sanctions of the Indian government then in power, concerned about the impact of electronics imports if local manufacturing failed to take off. The report projected India’s electronics market growing to $400 billion in 10 years, with imports surpassing the nation’s crude oil revenues by then.

In the near term, India’s electronics market is forecast to reach $94.2 billion in 2015 from $68.3 billion in 2012, according to the report. This includes electronics products, components, semiconductor design and electronics manufacturing services.

The electronics products market alone is forecast to grow from $44.8 billion in 2012 to $64.85 billion in 2015. Some two-thirds of that relies on imports, and worse, high value-added local manufacturing is set to decline from the already low level of 7.9 percent of the overall products market in 2012 to 6.7 percent in 2015.

The report defines high value-added manufacturing as characterized by local sourcing, high levels of indigenous design and complete system manufacturing that would together amount to a value addition greater than 50 percent.

In the sub-segment of mobile phones, high value-added manufacturing is nil in India, according to the report.

The biggest task here is that India relies on imports for each of the top four constituents that go into making a mobile phone, regardless of the price bracket or features: Memory, display, processor/system-on-chip and camera.

That India has no semiconductor foundry worsens the matter. Only now has India given in-principle consent to two multinational associations to build two foundries in India with considerable financial aids from the federal government.

Local positioning

On the software end of the work, Xiaomi, when it started selling its own handsets in China, crowd-sourced many of the apps that go into its phones, from Brazil to India to Europe. Those apps and Xiaomi’s software that go into the phones on top of the Android platform are an essential part of how people see the handsets.

Even the improved Android version that Xiaomi calls MIUI is a big draw, and the company is setting up an R&D unit in Bangalore to fine-tune its software for local tastes.

For instance, the one Indian theme currently available on Xiaomi’s phones is based on the Taj Mahal, the country’s most famous structure. A theme usually appears as the display background with the icons for various apps in the foreground.

Xiaomi is looking to add a theme based on the Hindu festival of lights, Diwali, and later a cricket theme for the Indian cricket fans.

Picture courtesy- letsintern.com

by techtalks @TechTalks August 18, 2015 12:07 PM UTC


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