NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, May 18, 2015

Xiaomi, now the fifth largest smartphone vendor in the world, has already sold more than 1 million units in India since it entered the market a year ago. It is such a craze that at its March launch event of its latest Mi 4 phone in New Delhi, it drew a crowd of thousands of young, Indian “fans” eager to be a part of the Xiaomi story.

What makes these Chinese companies so special? They are competitive, use unique marketing means, and understand technology. Xiaomi has quickly become the “hipster” alternative to existing competitors in India such as Samsung and Micromax. It has generated a buzz on social media and has been selling phones through flash sales exclusively through Indian e-retailers. Xiaomi has less than 4% of the smartphone market share in India so far, and wants to grab a larger share.

Building on Indian prime minister Narendra Modi’s Make in India push, Xiaomi now plans to set up a local manufacturing unit and service centres by the end of 2015. As a further endorsement of its serious intent in India, the venerable corporate titan Ratan Tata on April 27 announced an undisclosed personal investment into the company.

China’s two largest internet giants, Alibaba Holdings Group, an e-commerce company, and Tencent Holdings, an internet services and entertainment company, have noticed Xiaomi’s India success. They are already big investors in Silicon Valley—and India’s young e-commerce space is alluring for them.