Xiaomi founder Lei Jun said that the company expects to disrupt India’s TV industry the way Reliance Jio disrupted the telecom spacee
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2018-04-22 03:17:24 Upload
Xiaomi expects to disrupt India’s TV industry the way
Reliance Jio disrupted the telecom space, the company’s founder Lei Jun said. Speaking to ET, Jun said that Indian consumers should get 32-inch TVs for as low as Rs. 10,000 but for that to happen, the government needs to lower taxes, a suggestion he would like to give to PM Narendra Modi if he gets a chance to meet him. Xiaomi is looking to also make its TVs in India sometime in 2018, and will look to set up factories for the same. Jun also expects explosive growth for smartphones in India – which No. 1 ranked Xiaomi should be able to tap backed by an improved supply chain - compared with the de-growth in China.
Let’s start with Xiaomi’s plans for televisions in India. Will Xiaomi be the next Reliance Jio as far as TVs are concerned, in terms of being a disruptor?
Yes, definitely. We believe that from product design, integrating hardware and internet services and from our operating efficiency of our TV business, we have made great improvements. So, we hope that in a relatively short period of time, we will become the No 1 smart TV brand in India. We are planning to make India programs for the TV as well.
For TV, will the strategy be online first, like in smartphones?
We will start with online and then step by step go to offline. We’re open to setting up manufacturing of TVs in India, hopefully in 2018. So, we need more factories and workers to work with us.
India head Manu Jain: India’s TV industry today is where the smartphone industry was three years ago. Today e-commerce contributes one-third of smartphone sales from 10% earlier. We believe we can do something similar with TV and completely disrupt the TV industry and hope we can become No. 1 in this category.
How does the India TV market compare to China’s?
From the first few months of our sales, we have understood that the Indian customers’ pain points or purchasing factors of buying TV are exactly the same as that of China. The only difference is that Indian consumers will need some time to get familiarised with the concept of smart TVs.
In China today, the best-selling variant is 55-inch TV, and in India right now, the best-selling variant is 32 inches. Actually 55 inches is not considered to be expensive in China, maybe at around Rs. 20,000.
What is stopping Xiaomi from bringing largescreen TVs to India at China prices?
In India, the TV taxes are much higher than in China which I cannot understand fully. TV should be a mainstream consumption. Imagine that one day, a 32-inch television will cost no more than Rs. 10,000. But for that, maybe we should consider lowering taxes for the TV industry so that more people can enjoy the benefits.
If I had the honour of meeting the Prime Minister Modi one more time, I would encourage and suggest TVs to have potentially lower taxes. Currently, the import tax is around 20% and then there is 28% consumption ( GST ) tax.
What has Xiaomi ended 2017 with in revenue terms? What’s the target/expectations in 2018?
Can’t comment on revenue numbers. But in Q3, we shared No 1 and in Q4, we were the absolute No 1. We understand that there are still complaints about supply chain issues, but we have made huge improvements. With our partners, we have six smartphone factories. By end of Q3, all phones that are made in India will have locally made PCBAs. In terms of supply of TVs, we are facing shortages, so TV today is 100% imported.
On smartphone rankings, some say you would find it difficult to sustain No. 1 ranking. Your views.
If we sustain, then it is great but it is not something that we worry about too much. Broadly though, we are super optimistic about India’s growth in the smartphone market. In some years, 400 million smartphones will be shipped to India, from annual shipment of 124 million in 2017 as per IDC. The China market though has saturated and since Q1 of last year, we have seen de-growth in China market. We are considering investing in more start-ups in India in tech ecosystem.
What will be your main challenges in India growth this year?
In India, we are like a start-up and our team is growing at a fast pace, so how we actually recruit more talent is a difficult challenge for us. Even though our supply chain capacity has grown leaps and bounds, we are still a bit far away in meeting the actual users’ demands. We worry that users may misunderstand us, we fear that they may think that we are playing some supply game with them and that may affect brand image. But to build more factories takes time and the global supply chain is complex.
Also, how to sell offline in a highly efficient model is also a challenge. In China, we did not realize the importance of offline market share, which was part of reason why other players surpassed us. India business has started offline business early.
Can you throw some colour on your future expansion and investment plans?
Jain: We’re already working with Hipad which makes powerbanks in the Noida factory. We have also started making phones at the Noida factory and we’re open to working with other partners. Also, TV is doing exceptionally well, and to improve supply, we will look at setting up of factories this year.
On data security, is there a tangible effort to move Xiaomi data centres to India?
Jain : We moved our data centres a few years ago for our entire business to AWS (Amazon Web Services), sitting out of Singapore and the US and we are open to moving these to India. It is something that we are exploring but we don’t have anything concrete to share right now. We will be happy to share any information with the government or work with the government if there are any kinds of concerns.
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