China continues to remain Xiaomi’s largest market by an order of magnitude, but the company is increasingly trying to spread its wings beyond its home turf. Its international foray began in 2014 when it entered the Indian market with a number of offerings, including its then-flagship, the Mi 3. Indian customers, thus far saddled with overpriced, under-performing devices from global multinationals like Samsung, LG and Sony at the mid and entry-level segments, lapped up the high-spec, low-cost devices from the Chinese company like there was no tomorrow. Pleasantly surprised by the response from Indian consumers, the company doubled down on the South Asian country, but also branched out to other international destinations like Indonesia and Brazil over the next year and a half.
However, with Xiaomi’s international operations head, Mr. Hugo Barra, and co-founders, Mr. Lin Bin and Mr. Lei Jun, repeatedly stressing on how important the Indian market is to them, the company has even started to make some of its smartphones in India through its contract manufacturer, Foxconn Electronics. The company is also believed to be interested in setting up an R&D center in the country, and has also been toying with the idea of setting up brick-and-mortar retail outlets to augment its online-only marketing mantra. Towards that end, the company had recently applied for a license to operate single-brand retail stores in the country. However, according to a report carried by the Economic Times, the Department of Industrial Policy and Promotion (DIPP) has now asked Xiaomi to furnish further details about its plans before it allows the Chinese multinational to proceed any further.
At the heart of the issue is the regulation that requires all single-brand retailers in the country to locally source at least 30% of all raw materials (by value) that go into the finished product to be sold through the single-brand retail outlets. With Xiaomi applying for an exception for products like Wi-Fi amplifiers, Bluetooth speakers and power banks, the company will now need to prove its case as to why it believes it satisfies the stringent regulations that govern who gets exemptions and who does not. Silicon Valley tech giant Apple has already got a green signal from the panel that decides on these matters, and its fate now lies in the hands of the department of economic affairs. Meanwhile, a Xiaomi spokesperson has already confirmed the developments, saying, “We are in constant discussion with the department for small clarifications, and have not met any major obstacles to date. We are unable to comment further on the specifics of the application as it is still being processed”.