Chinese smartphone maker Xiaomi announced Monday that it reached a deal with the Taiwanese tech giant Foxconn to begin the production of the first India-made smartphone.
The new headset, dubbed Redmi 2 Prime, is actually an upgrade of the Chinese company’s hugely popular Redmi 2 budget smartphone. Nevertheless, the India-made model would be especially tailored for the Indian market.
The move may be surprising since India is well-known for its astronomical income gap and high level of poverty. Yet, the 1.2 billion-people market holds huge potential even for smartphone industry. And Xiaomi has plans for dominance in the area because the recent deal grants it some advantages that other competitors do not have.
First, the Chinese will use a Foxconn’s southern India-based plant to assemble the devices. This means that shipping costs and times will be dramatically reduced. Second, the move will allow the company to manage easier its inventory.
Although both companies declined to disclose how much money they invested in the Andhra Pradesh plant, Xiaomi acknowledged that the move was a “significant step” towards grabbing as much of India’s smartphone market share as possible.
Xiaomi is now the leading smartphone vendor in its home country, but the Chinese market shows signs of fatigue. So, trying to sell its devices abroad seemed like the next logical step to make for the company. And the Chinese phone maker already sold its budget models to Brazil and India. Only recently it decided to settle a base in India.
But there is an obstacle that may hinder its success – critics claim that the Chinese government may spy on Xiaomi smartphone users via the online services the Chinese phone maker provides to its customers.
Apple Inc also tries to make its way into the Indian market. It recently expanded the number of its retail stores, promoted its devices heavily on national TV, and provided customers with alluring financing options. Not long ago, Apple was limited by India’s buying power, since those iPhones didn’t come cheap. Yet, recently iPhone sales surged 93 percent in the country in the last quarter. Currently the U.S.-based tech company holds only 2 percent of India’ smartphone market,but it has plans to grab more.
Xiaomi has been doing business in India for nearly nine years, but last year it had to shut down operations because Nokia declined to continue to produce headsets at its plant.
Still, India is a country that lacks basic road infrastructure and local suppliers, so manufacturing a smartphone locally was until now too challenging for many producers. On the other hand, the Chinese company may get unexpected help from the Indian government which recently rolled out the “Make in India” initiative, which aims at boosting economic growth by creating new jobs in the country.
Image Source: BGR