Shulou(Shulou.com)11/24 Report--

Beijing time March 16 news, according to foreign media reports, Xiaomi company is significantly adjusting its India strategy. The company had misjudged the tastes of Indian consumers, a costly mistake that made Samsung Electronics overtake Xiaomi to become the largest manufacturer in India, the world's second-largest mobile phone market.

Today, Indian consumers are willing to spend more money on better-looking and feature-rich models, but Xiaomi is still focused on selling phones that sell for less than 10,000 Indian rupees (835 yuan). By contrast, Samsung has launched phones that meet the expectations of Indian consumers and offers innovative financing solutions that most people can afford.

These moves by Samsung have helped it take away its leading position from Xiaomi in India's highly competitive mobile phone market. Samsung's share of India's mobile phone market reached 20% in the fourth quarter of last year, surpassing Xiaomi's 18%, according to market research firm Counterpoint Research.

"the Indian market is experiencing a 'high-end' trend. (but) Xiaomi is ill-prepared for this shift because of its focus on the cheap mobile phone portfolio." Counterpoint research director Tarun Passak (Tarun Pathak) said.

Xiaomi's share of India has been overtaken by Samsung with 626 million smartphone users, second only to China. Xiaomi's loose grip on the Indian market suggests that companies that fail to cater to changing consumer preferences will be punished in fast-growing economies with rising disposable income.

For example, India's Tata Motors once launched a household name Nano, which sells for 100,000 rupees (about 8345 yuan), which claims to be the cheapest car in the world. But Indian consumers are reluctant to buy because they associate low prices with poor quality.

India's market share of phones priced below $120 has fallen from 41 per cent two years ago to 26 per cent in 2022, according to Counterpoint. By contrast, high-end phones that sell for more than 30,000 rupees (2505 yuan) have doubled their market share to 11% over the same period.

Both Xiaomi and Samsung see India as a key growth market, and their best-selling electronic devices are smartphones. Between 2021 and 2022, Xiaomi's total revenue in India was $4.8 billion, while Samsung's sales were $10.3 billion, of which $6.7 billion came from smartphones.

However, Xiaomi is already under pressure in India because at least five senior executives have left and the Indian government has stepped up scrutiny of it. Previously, Xiaomi had $674 million in funds frozen by India's financial crime institutions on suspicion of illegal remittances to foreign entities. Xiaomi denied this.

As can be seen from the products listed on Xiaomi's Indian website, the phones provided by Xiaomi have failed to keep up with the high-end trend of Indian consumers. Xiaomi showed off six models that cost more than $360 (2485 yuan), while Samsung has 16. Samsung has seven models of phones under $120, while Xiaomi lists 39 models, most of which are out of stock.

In the past two years, high-end phones accounted for only 0-1 per cent of Xiaomi's total shipments in India, while Samsung's share of high-end phones more than doubled to 13 per cent, according to Counterpoint.

Samsung accounts for 13% of high-end phones, and Xiaomi has admitted that it has launched "too many" models in the past. The company is adjusting its product line to focus on high-end smartphones. In January this year, Xiaomi launched the red rice Note 12, which sells for more than 30,000 rupees (about 2505 yuan) at the top. The recently launched Xiaomi 13 Pro costs 79999 rupees (6678 yuan), which is the company's most expensive phone in India. The strategic shift seems to be immediate, with sales of the Hongmi Note 12 reaching $61 million within two weeks of its launch.

"We have launched a streamlined and simpler product portfolio focused on building expertise at the high end of the market, and the launch of the latest flagship Xiaomi 13 Pro is a step in that direction," said Muralikrishnan B, president of Xiaomi India. "We understand that we still have a long way to go in this journey, so we will launch stronger products."

Interestingly, it was reported in August last year that India was seeking to limit the sale of phones sold by Chinese brands for less than 12,000 rupees (1001 yuan) to support the ailing domestic mobile phone industry. This will affect Xiaomi, OPPO, vivo and other Chinese companies.

The move was aimed at squeezing Chinese mobile phone giants out of India's low-end market, people familiar with the matter said at the time. They say India is increasingly concerned that high-selling mobile phone brands such as realme and audio will weaken local manufacturers.

It now seems that if Xiaomi had been restricted by Indian policies in the low-end phone market, it would have accelerated its transition to the high-end mobile phone market. Smartphones priced under $150 accounted for 1/3 of India's mobile phone sales in the second quarter of last year, with 80 per cent coming from Chinese companies, according to Counterpoint.

Mobile phone loans, meanwhile, a program with Samsung's financing partners provided "convenient and guaranteed" loans that played an important role in its recent success in India, helping the company achieve $1 billion in mobile phone sales last year.

According to a Samsung mobile phone poster found by foreign media on a dusty fruit store street in the Indian state of Uttar Pradesh, Samsung said people with no loan history, low credit score or no payroll can buy a mobile phone. Sanjiv Kumar Wilma, the owner of a nearby multi-brand mobile phone store, has benefited from the company's loan program. Wilma said in an interview at his store that he used to sell five Samsung phones a month, but now he has quadrupled to 20, 18 of which were bought through a loan program.

Unlike its competitors, Samsung does not require proof of local addresses, making it easier for migrant workers or people working in other places to borrow money to buy phones, according to Wilma and another smartphone supplier in Mumbai. Samsung has yet to comment.

Raju Pullan, head of Samsung's mobile division in India, said in February that the growth of the high-end mobile phone market in small towns was much higher than that in big cities. He said that nearly half of the consumers who chose its financing plan were those seeking loans for the first time. Samsung says its financing app installed on smartphones can lock down devices and prevent unpaid users from making calls.

Xiaomi has also used the partnership to provide loans, which it says is a key driver of sales of phones priced at more than 15,000 rupees and says it will explore more such services. Mulari Krishnan said Xiaomi would also open more stores outside its existing network of 20,000 retail partners and promote local procurement of mobile phone parts, which could help reduce costs.

Some industry analysts say the new strategy could help Xiaomi restore solid growth in India. "Xiaomi has historically strong brand value, strong online and offline channels, and is expected to make a comeback with a strong high-end and cost-effective product portfolio." Prabhu Prabhu Ram, head of industry intelligence at CyberMedia Research, said.

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