Xiaomi and Foxconn join their forces in a common venture to assemble smartphones in India. China's Xiaomi Inc aims to reduce manufacturing costs by starting assembling smartphones in India. Taiwan-based tech giant Foxconn will be its partner in this new project to cut costs and conquer a bigger share of the Indian market. According to statistics, India has become the third-largest smartphone market in the world.
The factory is opening in Andhra Pradesh, in an Indian region known for its many tech enterprises. This new investment in the region is well received by the Prime Minister Narendra Modi, who campaigns to boost economic growth and transform India into a manufacturing powerhouse able to create much-needed employment.
According to statistics, India is the world's fastest growing smartphone market. However, a lack of infrastructure and good suppliers has hampered so far efforts to manufacture phones in the country. Currently, India's more than 100 different mobile phone carriers are forced to import from Taiwan and China.
On Monday, the south Indian assembly line started to produce Xiaomi's first locally made smartphone. The model is an India specific upgrade of Xiaomi's bestselling Redmi 2, a budget smartphone that comes with good features for its price tag. The Indian version is called the Redmi 2 Prime and it will be sold at $109.58 (6,999 rupees), according to company's executives. Both Xiaomi and contract electronics maker Foxconn kept the size of their investment undisclosed, as well as their plans for future production capacity.
Xiaomi entered the Indian market in July 2014. Since then, this South Asian market has grown fast to become its second-largest. The Chinese brand is preferred for in India for its low-priced phones, especially by cost-conscious customers and the youngsters.
In terms of smartphone shipments to India in the April-June quarter, Xiaomi ranked seventh. The Indian market segment is dominated by India's Micromax Informatics Ltd. and Samsung Electronics Co Ltd., according to Counterpoint Research.
Xiaomi's India head, Manu Jain, declared that the new facility will bring tax benefits and would help the company to manage better its inventory and reduce lead times from three to four weeks to under two weeks. In the meantime, Xiaomi is struggling to boost its slowing sales in China. For this reason, it is important for the company to strengthen its hold on emerging markets such as Brazil and India, in order to fuel growth.
According to statistics, in India the number of smartphone users has been around 140 million in the year 2014. By 2019, it is expected to reach 651 million, according to a study by Cisco.