Xiaomi are an interesting business, describing themselves as an Internet business but being one of the largest manufacturers of electronic goods – or at least, selling their own branded goods. Xiaomi, like the majority of manufacturers, subcontract device manufacturing to third party businesses such as Taiwanese contract manufacturer, Foxconn. From Xiaomi’s perspective, this mitigates some of the risk of building their own devices and operations, instead allowing Xiaomi to concentrate on the design, software and integration of the hardware.
Foxconn have built a successful business as being the manufacturing partner to a number of big names such as Hewlett-Packard, Apple, Dell, Amazon, Microsoft and Cisco. The Economic Times is carrying a report that Foxconn are planning on building a small factory in Sri City, Andhra Pradesh, India. This plant will be used to manufacture a number of different devices for various industries including smartphones, tablets, televisions, set-top boxes, printers and routers. This will be a relatively small plant with an estimated production capacity of up to 10,000 devices a day but it will be one of between ten to twelve Foxconn installations around the country. Foxconn are planning to employ at least 10,000 people building devices and the initial investment is around $2 billion over the next five years. Foxconn’s manufacturing plant reflects Xiaomi’s Indian expansion plants, where earlier in the year they announced a new research and development site in the subcontinent.
The Economic Times also reported that Foxconn is investigating other Indian states including Maharashtra, Gujarat, Telangana, Karnataka and Uttar Pradesh. It appears that the business has at least met with city planners in these areas. Foxconn’s strategy follows the market, whereby it is prepared to invest into a region once there is a sufficient market: we have recently seen LG planning it will invest into an Indian manufacturing plant once its market share reaches 10%. The logic behind these decisions is to take advantage of an inexpensive but skilled Indian workforce and devices being manufactured in the local economy are perceived as being more desirable by potential customers. Foxconn’s plans follow a number of smartphone makers around the world such as Asus, Microsoft, Karbonn and Motorola reputed to be looking to manufacturer devices in India.