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Xiaomi<\/a>’s growth in India has been beyond expectations and will form the base of international expansion for the Chinese smartphone maker and internet company. Speaking to ET’s Gulveen Aulakh and Karan Bajaj, founder and CEO Lei Jun<\/a> said growth in India and markets such as Indonesia, besides China<\/a>, will drive XIAOMI’s overall revenue to $15 billion by the year end. Focussed on replicating online efficiencies in the offline retail channel will be key to the next phase of growth. Edited excerpts:\n
\nQ: How has been India journey so far for Xiaomi?<\/strong>
\nXiaomi’s India journey has been way beyond our wildest expectations. According to IDC, we are number one in online. In the last two quarters, out of three phones sold online, one is a Xiaomi phone. We have created a lot of new records in the online space – our new product Redmi Note 4 has sold more than a million phones in the past 45 days.
\n
\nQ: What has been the biggest challenge so far for Xiaomi in India?<\/strong>
Supply and manufacturing. In our latest Redmi 4A<\/a> sale, we sold 2,50,000 phones in just 4 minutes. This also means a lot of users who want to buy our products could not get it and had a bad experience. So, we have already opened our second factory to ramp up manufacturing and solve supply issues so users can buy our products easily.
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\nQ: Despite outperforming, Xiaomi has been facing challenges to its overall growth in India. Are these similar to your experience in China?<\/strong>
\nIf we actually compare India growth with China growth, the success is very similar to what we have seen in China during the first two years of business. The business model that we innovated and invented is very effective when ecommerce is growing very rapidly. Maybe, in a couple of years we might face similar challenges in India that we face in China today.
\nThe biggest challenge we face is that the online market share compared to overall market share is actually rather limited. For e.g., in China, ecommerce is very established, but unfortunately the whole ecommerce market share is just 10% of goods sold in China. Of course, smartphone’s share as a category is slightly higher at 20% share. Our business model is all about efficiency, so it’s rather dependent on how many people adopt the internet. In China, after we have achieved such scale, the challenge is how to achieve the same in offline with efficiency. In India, after we achieve more than 50% market-share in online space, the question is how to do the same in offline.
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\nQ: Is this a global realisation that online has peaked, underlining offline’s growing importance?<\/strong>
\nI don’t look at it that way. I believe in past 20 years, ecommerce is a great invention. But, it cannot completely replace offline. Online has its own advantage and offline has its own advantages. The challenge is how we use the Internet way of thinking and technology to improve offline efficiency. Last year, we invented a new term called new retail. Basically, it is using the internet way to do offline. We can move a lot of value for money items from online and let people buy them offline at same price. We experimented with a new model called Mi Home in China last year and achieved great success. We will try the same model in India and think about how to do new retail here. A lot of people complain that cost of doing business offline is high and hence the cost of buying those products is also high. In China, we name this method as Internet Plus.
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\nQ: Can you explain the Internet Plus model? How do you get efficiencies?<\/strong>
\nWhen I think about Internet, it really emphasises on a great user experience. A lot of services on Internet are free, but if the user is not satisfied with the service, it’s meaningless. We are pricing our products at cost, so if we do not have user loyalty and the user is not happy with the products, what do we have? For e.g., traditional handset manufacturer and consumer electronic companies – they can easily make 100 categories. We only have about 10 categories and hope that each SKU will sell great volumes. This way, manufacturing, repair and warehousing cost is low. Then we use ecommerce, so the overall cost is low. We can easily price our products at half the price of what our competitors are selling. We use the same way of thinking and apply it to offline – our retails store in China called Mi Home is 100% operated by us at almost the ecommerce efficiency.
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\nQ: When can we expect to see the first of Mi Home stores in India?<\/strong>
\nWe are experimenting and thinking about how we should do this in India. One key concept about the internet way of thinking is you actually need to experiment, get feedback and then iterate on the model. It’s all about experimentation. If we actually test and if it works well, then Mi come can be an inspiration to India’s retail economy.
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\nQ: What are your global plans for expansion? When do you plan to get into the US market full-fledged?<\/strong>
\nXiaomi is a still a start-up and we are growing at a rapid pace. In 2017, we expect to surpass 15 billion dollars of revenue. This phase is all about focus and moving step by step. In India, we have already achieved success. The second country we want to focus is Indonesia, then Russia, Ukraine and Vietnam. In Indonesia, we are already number 4, in Russia we are in the top 5, Ukraine we are number 2. We want to make sure we achieve some success in these countries before we consider North America.
\n
\nQ: Over the last year, valuations of Xiaomi, which had reached a peak of 45 billion dollars, have dropped. Is that something you’re concerned about and monitoring?<\/strong>
\nA: Our valuation coming down is only speculation. In the past two years we have had no further fund raising round - we have a lot of cash flow. In the past two years, we have actually slowed down and want to bring a stronger foundation. Even in the toughest years, last year, we still achieved some growth.
\n
\nOn core technologies and innovation, we have a lot of breakthroughs. Only last year, we applied for over 7,100 patents worldwide and were granted 3,500 patents- half in China and half of them global. Last year, in our ecosystem business we crossed 15 billion RMB. We have over 50 million IOT products.
\n
\nQ: What is the split of revenue and volumes of offline and online sales in China? Going forward, what will the balance be?<\/strong>
\nBack in the days we were 100% online, nowadays, offline is about 20% of our business. Perhaps in the next few years, it’ll probably 50-50. This is the goal. The challenge is how we reach the same efficiency offline.
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\nQ: Is the 50-50 online\/offline channel a goal for India as well?<\/strong>
\nIn India, we need to first focus on how to get 50% market share in online. Currently the share in India is more than 30%.
\n
\nQ: As you ramp up manufacturing capacity in India, will you also look at exporting from here?<\/strong>
\nIt is a possibility but even today we are running out of stock very quickly in India. We need to fulfil the demand from Indian consumers before we consider exporting.
\n
\nQ: What is the next level of manufacturing ramp up to resolve supply issue? Are you looking at a third manufacturing plant?<\/strong>
\nWe have to first make sure that the second factory is running very smoothly and properly before we consider the third plant. Because of cost of production line, things need to run smoothly, quality control needs to be in place and after that we can consider a third plant.
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\nQ: Can you talk us through the competitive landscape in India? You face similar rivals in China. Will you be able to hold onto your No. 2 position in the smartphone segment in India?<\/strong>
\n
\nIn India’s competitive landscape, the key players are also China’s key players. So we know them very well. We have been in the phone business for the past five years and we have been competing with them all this while. We are very confident because we know our business model is unique. We are an Internet company with focus on user experience. We don’t rely on hardware to make profits.
\n
\nQ: Do you see the 4G feature phones with VoLTE a threat to smartphone growth?<\/strong>
\n
\nThe trend of smartphones is unstoppable. The trend of feature phones still selling in India is a temporary one. Right now, it’s still about the price. As technology evolves and manufacturing cost decreases, one day, if mid-range smartphones start selling at Rs 4,999, then feature phones will face a lot of pressure. In China, the market share of feature phones is almost close to zero.\n\n<\/body>","next_sibling":[{"msid":57865961,"title":"Intex Tech launches Rs 200-crore fund to invest in start-ups","entity_type":"ARTICLE","link":"\/news\/intex-tech-launches-rs-200-crore-fund-to-invest-in-start-ups\/57865961","category_name":null,"category_name_seo":"telecomnews"}],"related_content":[],"msid":57866018,"entity_type":"ARTICLE","title":"Growth in India markets will drive Xiaomi's overall revenue to $15 billion by year end: Xiaomi CEO Lei Jun","synopsis":"Lei Jun said growth in India and markets such as Indonesia, besides China, will drive XIAOMI\u2019s overall revenue to $15 billion by the year end.","titleseo":"telecomnews\/growth-in-india-markets-will-drive-xaiomis-overall-revenue-to-15-billion-by-year-end-xiaomi-ceo-lei-jun","status":"ACTIVE","authors":[{"author_name":"Karan Bajaj","author_link":"\/author\/479218843\/karan-bajaj","author_image":"https:\/\/etimg.etb2bimg.com\/authorthumb\/479218843.cms?width=100&height=100","author_additional":{"thumbsize":false,"msid":479218843,"author_name":"Karan Bajaj","author_seo_name":"karan-bajaj","designation":"Editor","agency":false}},{"author_name":"Gulveen Aulakh","author_link":"\/author\/19656\/gulveen-aulakh","author_image":"https:\/\/etimg.etb2bimg.com\/authorthumb\/19656.cms?width=100&height=100","author_additional":{"thumbsize":true,"msid":19656,"author_name":"Gulveen Aulakh","author_seo_name":"gulveen-aulakh","designation":"Assistant Editor","agency":false}}],"Alttitle":{"minfo":""},"artag":"ET Bureau","artdate":"2017-03-28 08:48:11","lastupd":"2017-03-28 09:09:03","breadcrumbTags":["Xiaomi","China","Interviews","Devices","Lei Jun","Redmi 4A"],"secinfo":{"seolocation":"telecomnews\/growth-in-india-markets-will-drive-xaiomis-overall-revenue-to-15-billion-by-year-end-xiaomi-ceo-lei-jun"}}" data-authors="[" karan bajaj","gulveen aulakh"]" data-category-name="" data-category_id="" data-date="2017-03-28" data-index="article_1">
小米在印度的增长超出预期,将形成国际扩张的基础上为中国智能手机制造商和互联网公司。对ET的Gulveen Aulakh和卡兰巴贾杰,创始人兼首席执行官雷军说印度和印尼等市场,增长中国将推动小米的总收入,年底的150亿美元。关注复制网上线下零售渠道的效率将是下一阶段的经济增长的关键。编辑摘录:问:印度旅行到目前为止已经小米如何?
小米的印度之旅已经超出了我们的想象。根据IDC的数据,我们是在网上。在过去的两个季度,三个手机在线销售,一个是小米手机。我们创造了很多新的记录在网络空间,我们的新产品红米注意4的销量超过一百万手机在过去45天。
问:迄今为止最大的挑战什么小米在印度吗?
供应和制造。在我们最新的红米4出售,我们出售50000手机在4分钟内。这也意味着很多用户想买我们的产品不能得到它,有一个糟糕的经历。所以,我们已经开了我们的第二个工厂提高生产和解决供应问题,因此用户可以轻松地购买我们的产品。
问:尽管优于,小米已经在印度其整体经济增长面临挑战。在中国这些是类似于你的经历吗?
如果我们比较印度与中国的增长增长,成功非常类似于我们看到在中国期间的前两年的生意。我们创新的商业模式,并且发明了电子商务迅速增长时非常有效。也许,几年后我们在印度可能面临类似的挑战,面对今天的中国。
我们面临的最大挑战是,在线市场份额相比,整体市场份额实际上是相当有限的。,例如,在中国,电子商务是非常,但不幸的是整个电子商务市场份额只有10%的商品在中国销售。当然,智能手机份额类别是略高于20%的市场份额。我们的商业模式都是关于效率,这是互联网,而取决于有多少人采用。在中国,我们已经达到这样的规模后,面临的挑战是如何在线下实现相同的效率。在印度,在我们实现超过50%的市场份额在网络空间中,问题是如何在线下做同样的事情。
问:全球意识到,这是一个在线已经见顶,突显出越来越重要是离线?
我不这样看。我相信在过去的20年里,电子商务是一个伟大的发明。但是,它不能完全代替离线。网上都有自己的优势和离线都有自己的优势。面临的挑战是如何利用互联网的思维方式和技术来提高离线效率。去年,我们发明了一个新词“新零售。基本上,它是离线使用互联网的方式。我们可以移动一个物有所值的物品从在线,让人们在同样的价格买离线。我们尝试了一种新的模式叫做想念家乡去年在中国,取得了巨大的成功。我们将试着同一个模型在印度和考虑如何做新零售。 A lot of people complain that cost of doing business offline is high and hence the cost of buying those products is also high. In China, we name this method as Internet Plus.
问:你能解释一下互联网+模型?你怎么得到效率?
当我想到互联网,它强调在一个伟大的用户体验。网上很多服务都是免费的,但如果用户不满意服务,这是毫无意义的。我们定价产品成本,所以如果我们没有用户忠诚度和用户不满意的产品,我们有什么?例如,传统手机制造商和消费电子公司,他们可以很容易地让100个类别。我们只有大约10类,希望每个SKU出售大卷。这种方式,制造、维修和仓储成本低。然后我们使用电子商务,所以总体成本低。我们可以很容易的价格我们的产品在我们的竞争对手销售价格的一半。我们使用相同的思维方式,应用于离线——我们的零售商店在中国叫做想念家乡在几乎100%由美国电子商务效率。
问:我们什么时候可以期待看到第一个想念家乡的商店在印度?
我们尝试和思考我们应该如何在印度这样做。关于互联网的思维方式的一个关键概念是你实际上需要实验,得到反馈,然后对模型进行迭代。这是关于实验。如果我们实际测试,如果效果不错,然后Mi是一个灵感来印度的零售经济。
问:你的全球扩张计划是什么?当你打算进入美国市场成熟的?
小米是一个仍然启动和我们正在快速增长。2017年,我们预计超过150亿美元的收入。这个阶段是专注和移动一步一步。在印度,我们已经取得了成功。第二个国家我们要关注的是印度尼西亚,然后俄罗斯、乌克兰和越南。在印尼,我们已经4号,在俄罗斯在前5,乌克兰2号。我们要确保我们取得一些成功在这些国家之前我们认为北美。
问:过去一年,小米的估值已经达到顶峰450亿美元,下降了。是你担心和监控?
我们的估值下降只是猜测。在过去的两年里我们没有进一步融资轮,我们有很多的现金流。在过去的两年里,我们已经慢了下来,想把一个更加坚实的基础。即使在最艰难的几年,去年,我们仍然取得了增长。
在核心技术和创新,我们有很多突破。就在去年,我们对7100项全球专利申请和获得了3500项专利,其中一半在中国和全球的一半。去年,在我们的生态系统业务交叉150亿元。我们有超过5000万个物联网产品。
问:的分裂是什么收入和大量的离线和在线销售在中国吗?展望未来,平衡是什么?
在我们网上100%,如今,离线是大约20%的我们的业务。也许在未来的几年里,它可能会一半对一半。这是我们的目标。面临的挑战是如何达到相同的效率离线。
问:是一半对一半印度在线/离线渠道的目标吗?
在印度,我们首先需要关注如何在网上得到50%的市场份额。目前印度的份额超过30%。
问:当你在印度增加产能,将你也看看从这里出口吗?
它是可能的但即使今天我们在印度股票很快耗尽。我们需要满足我们认为出口前的印度消费者的需求。
问:什么是下一个制造业水平的提高来解决供应问题?你在看第三个工厂吗?
我们必须首先确保第二个工厂是非常顺利,妥善之前我们认为第三工厂。因为生产成本线,需要运行顺畅、质量控制需要到位之后,我们可以考虑第三个工厂。
问:你能说我们通过印度的竞争格局?你在中国也面临着类似的竞争对手。你能抓住你的2号位置在智能手机领域在印度吗?
在印度的竞争格局,关键球员也中国的关键球员。我们知道他们很好。我们一直在电话业务在过去的五年中,我们一直与他们竞争。我们非常有信心,因为我们知道我们的商业模式是独一无二的。我们是一家互联网公司,专注于用户体验。我们不依靠硬件来赚取利润。
问:你看到回的4 g手机威胁到智能手机增长?
智能手机的趋势是不可阻挡的。功能手机仍然在印度销售的趋势是暂时的。现在,它仍然是关于价格。随着技术的发展和生产成本减少,有一天,如果中档智能手机开始销售在Rs 4999,那么功能手机将面临很大的压力。在中国,功能手机的市场份额几乎接近于零。
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