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<\/span><\/figcaption><\/figure>The geopolitical tension between India and China has angered Indian consumers which they are largely expressing on social media, but it hasn’t hurt sales week on week and won’t impact business in the long term, Xiaomi India<\/a> MD Manu Kumar Jain<\/a> told ET’s Himanshi Lohchab and Romit Guha. In his first reactions since the border clashes, Jain said there is a mob mentality, which Xiaomi is facing, but these protesters are mainly fringe elements, who want to be seen on TV and on social media. Jain took a potshot at non-Chinese origin rivals, saying a ‘US company’ imports its phones from China and local Indian brands only relabel and sell in India, while Xiaomi’s makes all its devices<\/a> in India, sourcing on average 65% of the components locally. Jain though expects a softer 2020 versus 2019 due to a complete washout in the two months’ lockdown and expects to reach pre-COVID sales levels in the third quarter. Edited excerpts:

What are your views on the backlash against China and Chinese-origin companies in India?
<\/strong>
If you look at the last few weeks, has there been a backlash against companies from a particular country or a region? Definitely yes. And I think it started happening somewhere in the middle of lockdown. And I totally understand this, that people are angry. And this got aggravated by the recent geopolitical situation. Of course, there's a backlash on social media… a mob mentality, which of course we are facing.

But it won’t impact our business, from a long-term perspective. I believe the consumers are very intelligent… five years ago, when Xiaomi was not in India, there were only two options. Either to buy very low-quality products or to buy super expensive products. And Xiaomi came and redefined the way smartphones, smart TVs and all IoT devices work. Today, one out of three smartphones sold in India is a Xiaomi phone. We have a 35% share in smart TVs. If you look at the growth of smart TVs in last two years, 75 to 80% of that growth is due to Xiaomi.

But your country of origin always gives rise to misgivings…
<\/strong>
Of course, was our origin in China? Yes.

But we've built a truly multinational company. Many of our co-founders are from different countries. People with citizenship of US, Hong Kong, Singapore. We are listed in Hong Kong and people across the world have invested in Xiaomi. The company’s board is truly global with people across the world. And today, we are present in more than 90 markets or countries. And each of these big markets, we have tried to build a local team with local culture.

If you look at the smartphone industry of India, I can confidently say that we have more Indian in spirit than any other smartphone company.

People are talking about US brands, but people forget the brand is made nearly 100% in China, every single component, and they're just importing in India. There were so called Indian brands, but they used to buy a product from China and just rebrand and sell it here with minimal customization. And that's why their innovation and their quality control was very poor. People stood up in a launch event said that we were working on this product for a year, and it came out as a rebranded product from China, and they didn't even change the home screen, the screensaver. They just changed the logo and called it an Indian phone.

All our phones are made in India, most of our TVs are made in India. We have generated employment for 50,000 people in India, including Xiaomi India team members and everybody that works exclusively for Xiaomi. We have paid everyone's salary. We have a local product team, local R&D team, quality teams. A 100% of the data for Indian users stays in India. It's stored in AWS servers in India in encrypted form. The entire leadership team is here. We pay taxes here in India, And I can confidently say that we have been investing every single year.

If you look at all multinational companies, they will send somebody from their own country to lead the team in India. Not just smartphones, but look at even automobiles, be it from Japan, Korea… Their entire leadership team would be from the home country like Japan, Korea, China, Taiwan. Some of the companies will have one Indian face for say marketing or a PR perspective. But all the decision making would be from people coming from abroad.

Nobody has pushed the design for India, make for India, made in India agenda as much as we have. If you look at today, a large number of our components are locally produced or sourced in India, we're not just doing basic assembly like many other brands. Our PCBAs, battery backs, touch panels, back panels, camera modules are all made in India.

Other brands have been here for 15-10 years. We've been here for six years out of which our Make in India journey has been like four-and-a-half-year-old. And still, we are ahead of anybody else in localization. In spirit are we more Indian than anybody else. And I think people will understand this over a period of time while making that buying decision.

Given the border skirmishes, have you faced threats on a personal front or on your premises?
<\/strong>
We have less than 10 people from China working in India…And that talks about confidence and the localization that we have done. We have again not issued any security advisory. Of course, we understand things are tough right now. But there's no reason for us to panic or to have any concerns regarding security, neither at our office nor at our shops, or anywhere else.

Now once or twice in the last one week or 10 days, there have been one or two episodes when people have come outside our shop or store, they've raised slogans. Apart from two episodes, we haven't any seen any major episode till now. But this, to us, appears more like Twitter reaction. There are people who want to be seen on TV and like this is a great opportunity for them.

We have not increased security anywhere even factories or warehouses and nowhere else.

Have you seen week on week sales take a hit due to the Indo-China tensions?
<\/strong>
No.

I will give you three examples. First, two to three weeks ago, we launched a product called
Redmi<\/a> earbuds, TWS (true wireless headphone). The entire TWS market is about 6 lakh units in a quarter. And the largest selling brand in India sold about 1 lakh units in Q1. And we crossed the one lakh number in one week.

No. 2 - Last week, we launched our flagship laptop called Mi Notebok 14 Horizon edition. We went on sale last week. Now, of course, when I talk about laptop, the laptop market itself is very small as compared with phones. And we were out of stock within like two three minutes.

No. 3 - We launched phones called
Redmi Note 9<\/a> pro and 9 Pro Max in March. It has been more than three months since the launch happened. Even till now, whatever we bring every week, it goes out of stock within like two-three minutes.

But in the week as we speak compared to the week before, when things weren't as bad, any change in your sales patterns?
<\/strong>
No. Any change which happens is mainly because of supply. But from a demand perspective, number of users coming on our website or Amazon or walking into stores, there's no change.

So, how does that compare to pre-Covid numbers?
<\/strong>
Of course, from pre-Covid numbers, it is still low, especially from a walk-in perspective. One because window shopping has completely died and second, because people are also using other O2O platforms like we just launched Mi commerce.

But in terms of absolute sales, it is what percentage of pre COVID levels?
<\/strong>
Today, it is still lower than pre-COVID but based on how trends are increasing every week, we are expecting that by Q3, we should be able to get to the same levels as pre-COVID. Let me give the two big caveats. First, there is no major lockdown and second, we are able to ramp up factories without any major hurdles.

So what are the challenges that you're facing right now from a local manufacturing perspective? And how can the government help mitigate that?<\/strong>

The biggest challenge is on availability of manpower. It's not only for manufacturing, even at warehouses, delivery boys, after sales service centres, shop boys. Luckily for us, a lot of our manpower was from local villages and not from other states and since 95% of our workforce in factories are women, we had already built dormitories, given their safety. So the ramp up is easier for us as long as the government regulations allow them, we should be able to ramp up hopefully, faster and easier than many other people in the industry.

Read also<\/h4>
<\/a><\/figure>
Xiaomi India head Manu Jain on anti-China sentiment, smartphone demand, FDI rules<\/a><\/h5><\/div>
<\/a><\/figure>
Boycott China: Xiaomi more Indian than local handset companies, says India MD<\/a><\/h5><\/div><\/div><\/div>
Are you seeing any disturbance in your offline channel in terms of boycott?
<\/strong>
At least till now, we have 10,000 retailers selling Xiaomi products. There's not even a single retailer who has said I will not sell Xiaomi products because of their country of origin.

In the smartphone segment, consumers don't have affordable options apart from Chinese brands. But that is not the case in smart TVs and laptops. Do you see that as a problem?<\/strong>

No. We have more than 35% market share in smart TVs. We are as big as Sony, Samsung and Panasonic combined. And if a consumer finds the product reliable in terms of quality and it fits his budget, I don't think he\/she will be bothered about our country of origin.

Overall, FY20-21 is expected to be softer than FY19-20 growth wise. Your views.<\/strong>

So, will our growth be lower? Definitely yes. One, because the market is going down. Most analysts have cut this year’s estimates to 130-135 million because of COVID-19. Second, for these two months of lockdown, we were not able to sell any volumes, it was a complete write-off.

These anti-China issues have cropped up from time to time and Xiaomi has been caught in these cross hairs, when it comes to data privacy, or border issues…<\/strong>

Honestly speaking, of course it’s an irritant. But is this the number one thing that we worry about? No.

Currently, you are importing some phones due to manufacturing and distribution constraints. What is your proportion of imported products vis-a-vis locally manufactured ones?
<\/strong>
Usually, we import less than 1% of our phones sold in India. Only high-end phones which cannot be manufactured here, due to technical constraints, or during special sale events such as Diwali sales, are phones imported. We have been importing during the month of June because manufacturing is still taking time to ramp up and the demand is extremely high. We are expecting it will go back to 99% versus 1% very soon, within a few weeks, or Q3.

We make less than 5% profit margin on hardware. And the import duty on a completely billed unit (CBU) is 20%. So, given our business model, we don't want to keep importing for long.

In the component ecosystem, do you see high value manufacturing in India anytime soon? What is the roadmap for Xiaomi and the industry?<\/strong>

We should look at it, as at least a 10-year horizon for this to be successful. Even for big manufacturing countries like the US, China, Korea, Taiwan, it took decades to set up local manufacturing hubs. Take an example of phones. Phones were assembled in India but battery packs came from abroad. Now battery packs are made in India but battery cells are still coming from abroad. Now maybe battery cells in the future will be made in India but the raw material for it comes from abroad. So, it's a test match not like a T20 or a one-day.

So are you in the process of applying for the production-linked incentive scheme?<\/strong>

We're definitely studying it. I think it's a great scheme for anybody to get the incentive for both local production and export.

Just one technical point. Do you need to apply or do your contract manufacturing partners need to apply?
<\/strong>
My understanding is that a manufacturing partner needs to apply. But of course, the government will take into account which is the brand that they're supporting. In our case, we work with two partners.

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在社交媒体面临“暴徒的心态”,但印度消费者很聪明:小米的耆那教的

印度和中国的地缘政治之间的紧张关系已经激怒了印度消费者,他们在很大程度上是表达在社交媒体上,但这并没有影响销售在每周和不会影响业务从长远来看,小米印度医学马努Kumar Jain告诉ET Himanshi Lohchab和Romit古哈。

Himanshi Lohchab Romit古哈
  • 更新在2020年6月24日在37点坚持
阅读: 100年行业专业人士
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印度和中国的地缘政治之间的紧张关系已经激怒了印度消费者,他们在很大程度上是表达在社交媒体上,但这并没有影响销售在每周和不会影响业务从长远来看,小米印度医学博士马努Kumar耆那教徒的告诉ET Himanshi Lohchab和Romit古哈。在他的第一个反应的边境冲突以来,Jain说有一个暴徒的心态,面对小米,但是这些抗议者主要是边缘元素,那些想上电视和社交媒体。Jain华人对手胡乱打了一枪,说“美国公司”从中国进口手机和印度当地品牌只有在和销售在印度,而小米的使其所有设备在印度,采购平均65%的本地组件。耆那教徒虽然预计柔和的2020年和2019年由于一个完整的冲刷在两个月的封锁,预计将在第三季度达到pre-COVID销售水平。编辑摘录:

广告
你有什么意见反对中国和中国公司在印度吗?

如果你看看过去几周,有反对公司从一个特定的国家或地区?肯定是的。我认为这事情发生在封锁的中间。我完全理解这一点,人们生气。这加剧了近期地缘政治形势。当然,社交媒体上有反弹…一群暴徒的心态,当然,我们正面临着。

但这不会影响我们的业务,从长期的角度来看。我相信消费者是非常聪明…五年前,当小米并不是在印度,只有两个选择。购买非常劣质产品或购买超级昂贵的产品。和小米,重新定义智能手机、智能电视和所有的物联网设备的工作。今天,三分之一的智能手机在印度是一个销售的小米手机。我们在智能电视拥有35%的份额。如果你看看智能电视的增长在过去的两年里,75年80%的增长是由于小米。

但是你的原产地总是产生疑虑…

当然,我们在中国的起源吗?是的。

但是我们已经建立了一个真正的跨国公司。我们的许多合伙人来自不同的国家。美国国籍的人,香港,新加坡。我们在香港上市,人们在世界各地投资小米。公司董事会是真正意义上的全球世界各地的人。今天,我们在90多个市场或国家存在。和每一个大市场,我们试图建立一个本地团队与当地文化。

如果你看看印度的智能手机行业,我可以很自信地说,我们有了更多的印度在精神上比其他智能手机的公司。

广告
人们谈论美国品牌,但是人们忘记这个品牌是由近100%在中国,每一个组件,它们只是在印度进口。有所谓的印度品牌,但他们用来从中国购买产品和重塑和出售在这里用最小的定制。这就是为什么他们的创新和质量控制很穷。人站在发布会上说,我们在研究这个产品一年,和出来为来自中国的产品,甚至他们没有改变主屏幕,屏幕保护程序。他们只是改变了标志,称之为一个印度人的电话。

我们所有的手机都是在印度,大多数我们的电视都是在印度。我们已经生成的就业50000人在印度,包括小米印度团队成员,每个人都专门为小米。我们每个人的工资支付。我们有一个当地的产品团队,当地的研发团队、质量团队。印度100%的数据用户停留在印度。这是在印度以加密形式存储在AWS服务器。整个领导团队在这里。在印度我们纳税,我可以很自信地说,我们已经投资每一年。

如果你看看所有的跨国公司,他们将派人从自己的国家带领团队在印度。甚至不仅仅是智能手机,但看看汽车,无论是从日本、韩国…整个领导团队将从祖国像日本,韩国,中国,台湾。一些公司将有一个印度面临的市场营销或公关的角度说。但是所有的决策将是来自国外。

没有人将为印度设计,让印度,在印度议程一样。如果你看看今天,大量的组件是在印度当地生产或采购,我们不只是做基本的组装和许多其他品牌。pcba,电池背,触摸面板,面板,相机模块都是由在印度。

其他品牌在这里已经10年了。我们来到这里已经有六年的我们在印度的旅程就像four-and-a-half-year-old。不过,我们领先其他人本地化。在精神上我们比其他人更多的印度。我认为人们会理解这个经过一段时间而做出购买决策。

考虑到边境冲突,你在个人方面面临威胁或在你的前提?

我们有不到10人来自中国在印度工作…,谈到信心和本地化,我们所做的。我们又不发出任何安全咨询。当然,我们理解现在艰难的事情。但是我们没有理由恐慌或有任何关于安全的担忧,无论是在办公室还是在我们的商店,或其他地方。

现在一次或两次在过去一周或十天,有一个或两个事件当以外的人来我们的商店或商店,他们提出的口号。除了两集,我们没有看到任何重大事件到现在。但是,对我们来说,似乎更像Twitter反应。有些人想要在电视上见过,这样对他们来说是一个很好的机会。

我们没有增加任何安全甚至工厂或仓库,其他什么地方也没去。

你见过在每周销售遭受打击由于印度支那紧张吗?

不。

我将给你三个例子。首先,两到三个星期前,我们推出了一个产品红米无线耳机耳塞,TWS(真正的)。整个TWS市场大约是6十万的单位在一个季度。和最大的销售品牌在印度第一季度售出约十万的台。我们穿过一个十万的数量在一个星期。

2号——上周,我们推出了旗舰笔记本叫Mi Notebok 14层版。我们上个星期发售。当然,当我谈到的笔记本电脑,笔记本电脑市场本身是与手机相比很小。我们像两个三分钟内脱销。

3号,我们推出的手机红米注意93月和9 pro马克斯。问世以来已经三个多月了。甚至到现在,无论我们把每个星期,2 - 3分钟内脱销。

但在本周我们说话与前一周相比,当事情没有那么糟糕,你的销售模式有什么变化吗?

不。任何改变的发生主要是因为供应。但从需求的角度看,未来在我们的网站上的用户数量或者亚马逊走进商店,没有改变。

所以,如何比较pre-Covid数字吗?

当然,从pre-Covid数字,它仍然很低,特别是从一个大的视角。因为逛街已经完全死亡,第二,因为人们还使用其他O2O平台像我们刚刚推出了Mi商业。

但在绝对销售方面,pre COVID水平的比例是多少?

今天,它仍低于pre-COVID但基于如何每周增加的趋势,我们预计,到第三季度,我们应该能够得到pre-COVID一样的水平。让我给这两个大的质疑。第一,没有主要锁定,第二,我们能提高工厂没有任何重大的障碍。

那么你现在面临的挑战,从当地制造业的角度?政府如何帮助缓解呢?

最大的挑战是人力资源的可用性。这不仅是制造业,甚至在仓库,交货男孩,售后服务中心,商店的男孩。幸运的是,我们的很多人力从当地村庄,没有从其他州和工厂95%的员工是女性,我们已经建了宿舍,考虑到他们的安全。增加是更容易为我们只要政府规定允许他们,我们应该能够增加希望更快和更容易比其他许多人。

读也


你看到任何扰动在线下渠道的抵制?

至少到现在,我们有10000个零售商销售小米的产品。甚至没有一个零售商曾说我不会卖小米的产品,因为他们的原产地。

在智能手机领域,消费者没有负担得起的选择除了中国品牌。但这并不是在智能电视和笔记本电脑。你看到这个问题吗?

不。我们有超过35%的市场份额在智能电视。我们是大如索尼、三星和松下的总和。如果消费者发现产品可靠的质量和它适合他的预算,我不认为他/她会关心我们的原产地。

总的来说,FY20-21预计将比FY19-20柔软增长智慧。你的观点。

所以,我们的增长会降低吗?肯定是的。因为市场下降。多数分析师削减今年的因为COVID-19估计,130 - 135。第二,这两个月的封锁,我们不能出售任何卷,这是一个完整的注销。

这些反华问题不时涌现,小米被抓到在这些十字准线,当涉及到数据隐私,或边界问题…

说句实话,当然这是一个刺激。但这是我们担心的一件事吗?不。

目前,进口一些手机由于制造和分销的限制。你进口产品的比例相对于本地生产的吗?

通常,我们进口不到1%的手机在印度出售。只有高端手机不能生产,由于技术的限制,或在特殊的销售活动,比如排灯节销售、进口手机。我们已经在6月进口因为生产还需要时间增加和非常高的需求。我们预计它将很快回到99%和1%,在几周内,或第三季。

我们做硬件利润率不到5%。和进口税完全收费单位(CBU)是20%。所以,鉴于我们的商业模式,我们不想让长期进口。

在生态系统的组件,你看到高价值的制造业在印度很快吗?小米和行业的路线图是什么?

我们应该看,至少10年地平线成功。即使对于大制造业国家,如美国,中国,韩国,台湾,他们花了几十年才建立当地的制造业中心。拿手机的一个例子。手机在印度组装但电池来自海外。电池现在在印度但电池仍来自国外。也许电池在未来将在印度但原料来自国外。所以,这是一个测试比赛不像T20或一天。

所以你是在申请的过程中根据激励方案?

我们肯定学习它。我认为这是一个伟大的计划对任何人的激励当地的生产和出口。

只是一个技术点。你需要应用或您的合同制造合作伙伴需要申请吗?

我的理解是,制造业合作伙伴需要申请。当然,政府会考虑品牌的支持。在我们的例子中,我们使用两个合作伙伴。

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<\/span><\/figcaption><\/figure>The geopolitical tension between India and China has angered Indian consumers which they are largely expressing on social media, but it hasn’t hurt sales week on week and won’t impact business in the long term, Xiaomi India<\/a> MD Manu Kumar Jain<\/a> told ET’s Himanshi Lohchab and Romit Guha. In his first reactions since the border clashes, Jain said there is a mob mentality, which Xiaomi is facing, but these protesters are mainly fringe elements, who want to be seen on TV and on social media. Jain took a potshot at non-Chinese origin rivals, saying a ‘US company’ imports its phones from China and local Indian brands only relabel and sell in India, while Xiaomi’s makes all its devices<\/a> in India, sourcing on average 65% of the components locally. Jain though expects a softer 2020 versus 2019 due to a complete washout in the two months’ lockdown and expects to reach pre-COVID sales levels in the third quarter. Edited excerpts:

What are your views on the backlash against China and Chinese-origin companies in India?
<\/strong>
If you look at the last few weeks, has there been a backlash against companies from a particular country or a region? Definitely yes. And I think it started happening somewhere in the middle of lockdown. And I totally understand this, that people are angry. And this got aggravated by the recent geopolitical situation. Of course, there's a backlash on social media… a mob mentality, which of course we are facing.

But it won’t impact our business, from a long-term perspective. I believe the consumers are very intelligent… five years ago, when Xiaomi was not in India, there were only two options. Either to buy very low-quality products or to buy super expensive products. And Xiaomi came and redefined the way smartphones, smart TVs and all IoT devices work. Today, one out of three smartphones sold in India is a Xiaomi phone. We have a 35% share in smart TVs. If you look at the growth of smart TVs in last two years, 75 to 80% of that growth is due to Xiaomi.

But your country of origin always gives rise to misgivings…
<\/strong>
Of course, was our origin in China? Yes.

But we've built a truly multinational company. Many of our co-founders are from different countries. People with citizenship of US, Hong Kong, Singapore. We are listed in Hong Kong and people across the world have invested in Xiaomi. The company’s board is truly global with people across the world. And today, we are present in more than 90 markets or countries. And each of these big markets, we have tried to build a local team with local culture.

If you look at the smartphone industry of India, I can confidently say that we have more Indian in spirit than any other smartphone company.

People are talking about US brands, but people forget the brand is made nearly 100% in China, every single component, and they're just importing in India. There were so called Indian brands, but they used to buy a product from China and just rebrand and sell it here with minimal customization. And that's why their innovation and their quality control was very poor. People stood up in a launch event said that we were working on this product for a year, and it came out as a rebranded product from China, and they didn't even change the home screen, the screensaver. They just changed the logo and called it an Indian phone.

All our phones are made in India, most of our TVs are made in India. We have generated employment for 50,000 people in India, including Xiaomi India team members and everybody that works exclusively for Xiaomi. We have paid everyone's salary. We have a local product team, local R&D team, quality teams. A 100% of the data for Indian users stays in India. It's stored in AWS servers in India in encrypted form. The entire leadership team is here. We pay taxes here in India, And I can confidently say that we have been investing every single year.

If you look at all multinational companies, they will send somebody from their own country to lead the team in India. Not just smartphones, but look at even automobiles, be it from Japan, Korea… Their entire leadership team would be from the home country like Japan, Korea, China, Taiwan. Some of the companies will have one Indian face for say marketing or a PR perspective. But all the decision making would be from people coming from abroad.

Nobody has pushed the design for India, make for India, made in India agenda as much as we have. If you look at today, a large number of our components are locally produced or sourced in India, we're not just doing basic assembly like many other brands. Our PCBAs, battery backs, touch panels, back panels, camera modules are all made in India.

Other brands have been here for 15-10 years. We've been here for six years out of which our Make in India journey has been like four-and-a-half-year-old. And still, we are ahead of anybody else in localization. In spirit are we more Indian than anybody else. And I think people will understand this over a period of time while making that buying decision.

Given the border skirmishes, have you faced threats on a personal front or on your premises?
<\/strong>
We have less than 10 people from China working in India…And that talks about confidence and the localization that we have done. We have again not issued any security advisory. Of course, we understand things are tough right now. But there's no reason for us to panic or to have any concerns regarding security, neither at our office nor at our shops, or anywhere else.

Now once or twice in the last one week or 10 days, there have been one or two episodes when people have come outside our shop or store, they've raised slogans. Apart from two episodes, we haven't any seen any major episode till now. But this, to us, appears more like Twitter reaction. There are people who want to be seen on TV and like this is a great opportunity for them.

We have not increased security anywhere even factories or warehouses and nowhere else.

Have you seen week on week sales take a hit due to the Indo-China tensions?
<\/strong>
No.

I will give you three examples. First, two to three weeks ago, we launched a product called
Redmi<\/a> earbuds, TWS (true wireless headphone). The entire TWS market is about 6 lakh units in a quarter. And the largest selling brand in India sold about 1 lakh units in Q1. And we crossed the one lakh number in one week.

No. 2 - Last week, we launched our flagship laptop called Mi Notebok 14 Horizon edition. We went on sale last week. Now, of course, when I talk about laptop, the laptop market itself is very small as compared with phones. And we were out of stock within like two three minutes.

No. 3 - We launched phones called
Redmi Note 9<\/a> pro and 9 Pro Max in March. It has been more than three months since the launch happened. Even till now, whatever we bring every week, it goes out of stock within like two-three minutes.

But in the week as we speak compared to the week before, when things weren't as bad, any change in your sales patterns?
<\/strong>
No. Any change which happens is mainly because of supply. But from a demand perspective, number of users coming on our website or Amazon or walking into stores, there's no change.

So, how does that compare to pre-Covid numbers?
<\/strong>
Of course, from pre-Covid numbers, it is still low, especially from a walk-in perspective. One because window shopping has completely died and second, because people are also using other O2O platforms like we just launched Mi commerce.

But in terms of absolute sales, it is what percentage of pre COVID levels?
<\/strong>
Today, it is still lower than pre-COVID but based on how trends are increasing every week, we are expecting that by Q3, we should be able to get to the same levels as pre-COVID. Let me give the two big caveats. First, there is no major lockdown and second, we are able to ramp up factories without any major hurdles.

So what are the challenges that you're facing right now from a local manufacturing perspective? And how can the government help mitigate that?<\/strong>

The biggest challenge is on availability of manpower. It's not only for manufacturing, even at warehouses, delivery boys, after sales service centres, shop boys. Luckily for us, a lot of our manpower was from local villages and not from other states and since 95% of our workforce in factories are women, we had already built dormitories, given their safety. So the ramp up is easier for us as long as the government regulations allow them, we should be able to ramp up hopefully, faster and easier than many other people in the industry.

Read also<\/h4>
<\/a><\/figure>
Xiaomi India head Manu Jain on anti-China sentiment, smartphone demand, FDI rules<\/a><\/h5><\/div>
<\/a><\/figure>
Boycott China: Xiaomi more Indian than local handset companies, says India MD<\/a><\/h5><\/div><\/div><\/div>
Are you seeing any disturbance in your offline channel in terms of boycott?
<\/strong>
At least till now, we have 10,000 retailers selling Xiaomi products. There's not even a single retailer who has said I will not sell Xiaomi products because of their country of origin.

In the smartphone segment, consumers don't have affordable options apart from Chinese brands. But that is not the case in smart TVs and laptops. Do you see that as a problem?<\/strong>

No. We have more than 35% market share in smart TVs. We are as big as Sony, Samsung and Panasonic combined. And if a consumer finds the product reliable in terms of quality and it fits his budget, I don't think he\/she will be bothered about our country of origin.

Overall, FY20-21 is expected to be softer than FY19-20 growth wise. Your views.<\/strong>

So, will our growth be lower? Definitely yes. One, because the market is going down. Most analysts have cut this year’s estimates to 130-135 million because of COVID-19. Second, for these two months of lockdown, we were not able to sell any volumes, it was a complete write-off.

These anti-China issues have cropped up from time to time and Xiaomi has been caught in these cross hairs, when it comes to data privacy, or border issues…<\/strong>

Honestly speaking, of course it’s an irritant. But is this the number one thing that we worry about? No.

Currently, you are importing some phones due to manufacturing and distribution constraints. What is your proportion of imported products vis-a-vis locally manufactured ones?
<\/strong>
Usually, we import less than 1% of our phones sold in India. Only high-end phones which cannot be manufactured here, due to technical constraints, or during special sale events such as Diwali sales, are phones imported. We have been importing during the month of June because manufacturing is still taking time to ramp up and the demand is extremely high. We are expecting it will go back to 99% versus 1% very soon, within a few weeks, or Q3.

We make less than 5% profit margin on hardware. And the import duty on a completely billed unit (CBU) is 20%. So, given our business model, we don't want to keep importing for long.

In the component ecosystem, do you see high value manufacturing in India anytime soon? What is the roadmap for Xiaomi and the industry?<\/strong>

We should look at it, as at least a 10-year horizon for this to be successful. Even for big manufacturing countries like the US, China, Korea, Taiwan, it took decades to set up local manufacturing hubs. Take an example of phones. Phones were assembled in India but battery packs came from abroad. Now battery packs are made in India but battery cells are still coming from abroad. Now maybe battery cells in the future will be made in India but the raw material for it comes from abroad. So, it's a test match not like a T20 or a one-day.

So are you in the process of applying for the production-linked incentive scheme?<\/strong>

We're definitely studying it. I think it's a great scheme for anybody to get the incentive for both local production and export.

Just one technical point. Do you need to apply or do your contract manufacturing partners need to apply?
<\/strong>
My understanding is that a manufacturing partner needs to apply. But of course, the government will take into account which is the brand that they're supporting. In our case, we work with two partners.

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