Mi Stores contribute 15% to India business: Xiaomi

Chinese handset maker Xiaomi on Monday said it continues to ramp up its network of Mi Stores, its exclusive retail outlets in India, which contribute 15 per cent to its business in the country.

Xiaomi, which entered India in 2014 and sold smartphones exclusively online, had ventured into offline retail in 2017. Apart from Mi Stores, Xiaomi also operates its own chain of more than 75 Mi Homes, 45-plus Mi Studios and over 8,000 Mi Preferred Partners (through franchise model).

"Mi Stores are present in the smallest of cities and present in all possible locations, we have stores in Kashmir, Andaman and Nicobar. A large number of them have been opened by people who have no retail experience or experience in the smartphone industry, these are people who wanted to become entrepreneurs and business owners,"Xiaomi India Managing Director Manu Jain told PTI.

He added that the company is setting up the 3,000th Mi Store in Bulandshahr, Uttar Pradesh and noted that almost all of the Mi Stores are profitable and sustainable.

"Today, offline business contributes to almost half of our business in India and 30 per cent of that comes from Mi Stores...Mi Stores is the fastest growing channel for us right now...while the number of Mi Stores has grown from 500 to 3,000, the percentage contribution to business has grown from 5 per cent to about 15 per cent," he said.

While Xiaomi does not disclose country-specific revenue numbers, a regulatory filing with the Registrar of Companies (RoC) showed that the company's total revenue in 2018-19 grew by 54 per cent to Rs 35,426.92 crore from Rs 23,061.11 crore in FY18.

The Mi Store network -- which sells all Xiaomi products except shoes -- has been able to generate employment for over 6,000 people across India.

Jain said while overall demand for smartphones, smart TVs and laptops is high as people continue to work and study from home amid the COVID-19 pandemic, even products like trimmers are seeing a huge uptake.

"Initially it was thought that there would be a lot of movement from offline to online because of the pandemic, and some movement did happen. But offline continues to do well because of the trust and comfort factor. What has happened is that while traffic has gone down, conversion (to sale) has increased," he added.

On supply chain challenges, Jain said Xiaomi -- which is the biggest smartphone player in the country with 29 per cent market share in the June 2020 quarter -- is importing some products to meet the shortage.

"Products which are India-specific continue to be made in India 100 per cent. Since the India factories are not fully ramped up, we have to import some products...We are hoping that before the festive season we can go back to 100 per cent manufacturing in India, but that will depend on how the pandemic situation plays out," he said.

He cited an example that factories get closed for sanitation for a few days in case Covid cases are detected, which impacts production.

Asked about the impact of anti-China sentiment on its business, Jain said the company has seen strong demand both online and offline.

"We are as Indian as any other company here. A lot of our product development happens in India. Some products have been designed from scratch like trimmers, water purifiers and some products see modifications. All of our manufacturing is in India, even 65 per cent of the value of tier I components are sourced locally and we are trying to move tier II components in that direction," he added.

He said various brands even in the FMCG space carry out some core functions like R&D in other parts of the world but the product deployment and innovations for specific markets is carried out by local teams.

"We have done very little of what the overall potential of India is...and that can only be done if we are building a truly local company with local leadership, product development, R&D, manufacturing, sales and marketing, shops, everything is local," he said.