Decoding Xiaomi's success with Manu Kumar Jain: Highlights from an exclusive interview

What are Xiaomi's plans for the country? Will we see new feature phones? Manu Kumar Jain bares all!

Xiaomi is slowly but surely taking over the tech landscape in our country. The Chinese smartphone maker has already ousted the previously unchallenged Samsung as the number one phone-maker in India and is now looking to make in-roads with smart home gadgets and other electronics. Its TVs are already doing well — it was only recently reported that Xiaomi shipped over 1 mn Mi LED TVs in the last 9 months, and its air purifiers are certainly gaining momentum. But what else does Xiaomi have in store for us? What plans does its future hold?

Decoding Xiaomis success with Manu Kumar Jain: Highlights from an exclusive interview

Manu Kumar Jain, Managing Director of Xiaomi India, poses next to the logo of Xiaomi in his office in Bengaluru. Image: Reuters

We recently got in touch with Xiaomi's Manu Kumar Jain, (VP, MD, Xiaomi India) and enjoyed an extremely interesting conversation involving everything Xiaomi.

For more details, check out the conversation between Jain and Tech2 editor Ankit Vengurlekar below. For highlights from the interview, read on!

Xiaomi store is here! But why is Xiaomi not launching everything?

The first company-owned flagship store in Bengaluru and there are a whole lot of Xiaomi devices from the global product portfolio to check, out, but they're only there for demonstration purposes. Only “the ones launched in India are for selling”, says Jain.

But why taunt us with goodies we can't have?

The stores and goodies, says Jain, are a good way to gather consumer feedback, which in turn helps Xiaomi determine the product lines it needs to be focussing on. At the same time, “not everything that we launch in China can be suitable for India,” says Jain. Items like the Ninebot Mini Scooter and drones can't come to India because of local laws and regulatory issues. There's also the matter of price and import duty. Xiaomi's USP is value for money. As good as it is, would you buy a Mi LED TV if it was selling for Rs 1,00,000? Also, there are customisation issues with items like the Mi water purifier, which needs to be compliant with India's electricity standards and have the ability to deal with the composition of the water here.

It's raining Xiaomi smartphones. Hallelujah!

The one thing Xiaomi has no trouble selling in India is smartphones. At last count (we did the math), Xiaomi is selling over 20 smartphones in India! With this much variety, how does one choose the right smartphone? Isn't it overwhelming for the consumer?

Jain had a different take on the matter. According to him, what Xiaomi is doing is targeting consumers at every price range. Whatever your budget, there's always a Xiaomi phone for you. At the same time, such a large portfolio does need to be refreshed from time to time, hardware reaches end-of-life, supply shortages kick in, etc.

The typical product lifecycle is a year, but this year Xiaomi ended some in 6-8 months for the aforementioned reasons. Xiaomi's aim is to keep a 9-15 months life cycle for its smartphones, says Jain. According to Jain, the median price point is now between Rs 10,000-12,000, which constitutes the “belly of the market”. Four years ago, the bulk of the market was in the Rs 6,000 margin.

Xiaomi. Image: tech2/ Prannoy Palav

Xiaomi. Image: tech2/ Prannoy Palav

The dreaded flash sales

Ankit: "Flash sales suck!"

Jain: "I agree 100 percent!"

So why is Xiaomi still on to the flash sale wagon? Jain says that hopefully, and in the near future at that, they will be able to do away with flash sales altogether, as they have done with products like the Redmi Note 5 Pro. "But that will only happen when the supply chain can support it," he adds. “When we started four years ago, a flash sale was a great way to create excitement in the market, but today I do not think that is the case. Today, as a number one brand, it is our responsibility to ensure that every single one of our Mi fan who wants to buy whenever he or she wants to buy should be able to buy,” claims Jain. Xiaomi's reliance on flash sales is already reducing.

Today, Xiaomi goes from flash sales to open sales in a month or less than a month compared to previous years where it used to take about four to six months, points out Jain.

The POCO F1 is a game changer for the sub-Rs 25,000 smartphone segment. Image: Tech2/ Shomik Sen Bhattacharjee

The POCO F1 is a game changer for the sub-Rs 25,000 smartphone segment. Image: Tech2/ Shomik Sen Bhattacharjee

Why Xiaomi went Poco...

The Poco F1 is a remarkable phone for its price. Xiaomi has somehow managed to stuff in a Qualcomm Snapdragon 845 SoC, something we previously only saw in flagships costing twice as much, into a phone that is selling for Rs 20,000. Jain says that they picked this particular price point because of the way the market demand for phones has evolved. "About 90 percent of market demand for phones was less than Rs 15,000, and today, it's about Rs 20,000," notes Jain.

The company focused on consumer demands and what was needed in India and thus let go of many other products, for example, the ceramic backed Mi Mix 2, which takes four days to produce and has support for 43 global bands. While a cool product, this isn't necessarily what the Indian consumer wants, believes Jain.

This logic also explains why we're not seeing Xiaomi launch its flagship smartphones in India, devices like the Mi 6 or Mi 8 Explorer.

An ad-supported business model

Xiaomi has crashed the premium phone segment by selling the Poco phone at such a low price but with great specs. But in all of this, how is Xiaomi making money? How did Xiaomi make such a powerful phone at such a low price? There has to be some sort of catch, right?

As it turns out, there is a catch, and it's called advertising. Xiaomi has been seen to be placing ads in their Mi User interface as a business model. There have been ads splashed over all the settings pages, notifications and other spots in the UI. Jain responded by saying that “We are an internet company who wants to make money from our Internet products, not through hardware products.”

The company does not make more than 5 percent profit through hardware products. Xiaomi makes money from “financing, advertising and its content business” and tries out different ways for monetization, which includes “non-intrusive ads”. In a rather pleasant twist, Xiaomi still gives a user the option to turn off ads. The user need not pay an additional fee to disable them. “Control is always in the hands of the consumer, but we also want to make money through some of these internet products – through our apps, content business,” says Jain.

Left to Right: manu Kumar Jain, Eshwar Chandrasekaran and Raghu Reddy. Image: Twitter

Left to Right: Manu Kumar Jain, Eshwar Chandrasekaran and Raghu Reddy. Image: Twitter

Data localisation

Data localisation is a hot topic in India and the world. With massive data breaches happening all over the place, it makes sense for a country to want to hold multinational companies accountable for the user data they gather. Xiaomi, as a Chinese company, will be under additional scrutiny and whatever the case, they will have to comply with local data protection laws.

Jain notes that Xiaomi understands and feels that the data localisation might have a “sentimental perspective” to it, where a customer might not understand the complete technicality of the issue but the user might feel, “that my data is not within the country, I could be exposed to some sort of a risk.” For the peace of mind of the user, and to comply with local laws, Xiaomi has already moved its data services — three years ago — to Amazon Web Services (AWS) for non-China businesses in Singapore and US, and this year, it has started moving all its data to local servers with the transition being completed by end of the year “across all services” with “multiple levels of encryption.”

"The data is sitting in AWS and Microsoft servers physically here in India,” says Jain, smiling.

Where are the feature phones?

Given India's relatively low per capita income, it should come as no surprise that feature phones sell like hot cakes. They're cheap and affordable, after all. One just has to look at the success of the JioPhone to appreciate the need for such phones. Isn't Xiaomi looking to dabble in this seemingly lucrative market? While Xiaomi does have a "portfolio company" that produces feature phones, Xiaomi itself currently has no interest in building and selling feature phones in India, says Jain.

"All our products are smart and Internet-enabled," he adds.

Electronic waste recycling

Lastly, India's most popular smartphone maker must also be generating a lot of waste, right? Which begs the question, what is Xiaomi doing about e-waste and recycling used devices?

According to Jain, Xiaomi already has an e-waste program in place for the past two years. Users can hand in their old Mi devices and get some cash in exchange. Xiaomi, for its part, will responsibly recycle the phones by giving them to their partners. Other schemes such as “buyback or cashback” are also being introduced as incentives for people to return their ageing devices.

Jain is still to get back to us on whether there are any programs that are being run through offline stores.

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