Xiaomi and Foxconn set up Indian plant

UXo2y8hThe Chinese “Apple” Xiaomi has joined forces with Foxconn to start assembling its phones in India, in a bid to cut costs and grab a bigger slice of the world’s third largest smartphone market.

We say the world’s third largest, but it is also the most demanding in terms of price. The “sweet spot” in India is $100, which is nothing for a smartphone. It suffers from a lack of good suppliers and infrastructure forcing most of India’s more than 100 different phone companies to import from China and Taiwan.

Xiaomi and Foxconn are setting up shop in the southern state of Andhra Pradesh and it could sort out all those problems quite quickly.

The south Indian assembly line will roll out Xiaomi’s first locally made smartphone, the Redmi2 Prime, on Monday. The Redmi2 an India-specific upgrade to its best-selling Redmi2 budget smartphone and it will sell for $109.58.

Xiaomi hit the Indian market in July 2014 and it has become its second largest, as the company’s low-priced phones find favour with young and cost conscious customers.

In the April-June quarter, Xiaomi ranked seventh in terms of smartphone shipments in India — a segment that is dominated by Samsung and India’s Micromax Informatics.

Apart from bringing tax benefits, the new facility will help the company get rid of stock and reduce lead times from three to four weeks to under two weeks.

Over time, most Xiaomi phones sold in India will be made in India though that could take some time given the lack of development of the local supply chain.

Xiaomi’s growth in China has stalled so it is betting on emerging markets such as India and Brazil, where it began manufacturing in late June, to fuel growth.

The assembly line marks a return to India for Foxconn.

Foxconn has been among the firms making the most of Indian states’ new found competitive streak. It signed a $5 billion investment deal with the western state of Maharashtra, or the Presidency as I used to call it when I was a nipper.