Xiaomi, the Chinese multinational electronics company, has been forced to overhaul its India strategy after underestimating Indian consumers’ taste for premium mobile phones.
The company’s focus on selling budget phones under $120 left it unprepared for the “premiumisation” trend in India’s fast-growing economy, allowing Samsung Electronics to take the lead in country’s mobile phone market.
Data from Hong Kong-based Counterpoint Research showed that Samsung had a 20 per cent market share for the last quarter of 2022, compared to Xiaomi’s 18 per cent.
The market share of sub-$120 phones in India fell to 26 per cent in 2022 from 41 per cent two years ago, while premium phones priced above $360 saw their share price double to 11 per cent in the same period.
Xiaomi’s struggle to meet changing consumer preferences in India highlights the risks for companies operating in a fast-growing economy with rising disposable incomes.
The trend towards more expensive mobile phones in India will also benefit social media app providers such as Meta and iPhone maker Apple Inc, which have a tiny market share in the country due to their focus on high-end phones.
Xiaomi’s response to the changing market is to revamp its product line-up to focus on premium smartphones.
The company has launched the Redmi Note 12 and Xiaomi 13 Pro, both of which are priced above 30,000 rupees. The Redmi Note 12 has already clocked sales of $61 million within two weeks of its launch.
Xiaomi has also tapped partnerships to offer loans, calling them a key growth driver for sales of phones priced above $183.
Samsung’s innovative financing schemes that made premium phones affordable to most played a significant part in its recent success in India, generating $1 billion in device sales last year.
Xiaomi is also exploring more such offerings.
The overhaul of the brand’s strategy in India shows that companies have failed to cater to changing consumer preferences in a fast-growing economy with rising disposable incomes.
The punishment to the income brackets of the country comes as a stretch to the nation.
The company’s focus on selling budget phones under $120 left it unprepared for the “premiumisation” trend in India’s mobile phone market, allowing Samsung to take the lead.
Xiaomi’s response is to revamp its product line-up to focus on premium smartphones and tap partnerships to offer loans, following Samsung’s example.
The Indian market’s trend towards more expensive mobile phones will also benefit social media app providers such as Meta and iPhone maker Apple Inc, which have a tiny market share in the country due to their focus on high-end phones.
For all the latest business News Click Here
