Xiaomi made a splash when it sold all of its inventory (10,000 devices) in just a few seconds on India’s popular e-commerce site Flipkart. But it was nowhere close to being a serious competitor to other brands that had established a strong foothold in the Indian market over the course of several years. Besides, Xiaomi still had one more challenge that it had to urgently overcome before it could successfully penetrate this foreign market.
Indians, like the rest of the world, harboured great scepticism towards the quality and brand value of Chinese products. Long ago, Xiaomi’s CEO Lei Jun had identified this scepticism of Made in China goods as a major stumbling block in Xiaomi’s path to global expansion. In fact, he dreamt that some day Xiaomi would redeem China’s reputation with superior products that were honestly priced. As Xiaomi entered India, his vision and strategy were immediately put to trial. The other significant international brand in the race was Samsung, but as a South Korean company, neither did it share Xiaomi’s Chinese heritage nor its China tag. Besides, Samsung had already spent nearly eighteen years in India and was a household name by the time Xiaomi entered the country. Samsung had established its R&D department in Bengaluru way back in 1996; it began manufacturing refrigerators in India in 2003 and smartphones in 2007.
In 2014, the Indian ecosystem was pretty full with Samsung sharing space with Nokia and Motorola, who were almost on their way out, and a handful of domestic Indian brands that were all thriving. Unlike in the West, Apple was never a big player in India because of the price-sensitive nature of the market. Breaking into this league was, of course, going to take great marketing genius, but first, Xiaomi had to reinstate India’s faith in a Chinese brand.
If Indians distrusted a Chinese brand like Xiaomi, in its turn, Xiaomi too was apprehensive about letting its Indian employees run operations autonomously. The original plan, therefore, was to employ only five to ten people at the India office and let them monitor and push sales, while the Chinese offices would do the heavy-lifting with respect to products and take executive decisions. As the vice president of Xiaomi Global, Hugo Barra was, of course, in charge of overseeing a successful launch, but Xiaomi still needed someone else to head everyday operations in India. This was when Manu Jain, a rather unknown start-up founder at the time, came into the picture. Jain, the first employee of Xiaomi India, worked out of his apartment. He then moved to a coffee shop and then a tiny six-seater office. In April 2018, Xiaomi moved into a 180,000-square-foot plush office with over 750 seats in Bengaluru. If someone had asked him where the business would be in ten years, his answer probably would have been very off. Because no one could have predicted Xiaomi’s phenomenal success in India.
‘It was a little embarrassing. People would come, and we’d discuss deals worth `10 crore, and they’d ask, “Where’s your team?” And I’d say I’m the India head, and I’m the team. There’s nobody else. I would serve coffee. I would open the door, and I would do everything,’ Jain recalled of Xiaomi India’s early days in an interview with Anand Daniel, a venture capitalist with Accel Partners.
In many ways, Jain was an unusual choice to head a consumer electronics company. At the time, mobile phone companies in India were run by veterans such as Pradeep Jain, managing director at Karbonn with over twenty years of experience in the telecom sector, and Rahul Sharma, who co-founded Micromax in 2000. Sharma, and fellow entrepreneurs Rajesh Agarwal, Sumeet Arora and Vikas Jain, had started Micromax and had sold everything ranging from IT peripherals to telecom equipment. It was serious business and serious money. Compared with these men, Manu Jain was a newbie who, because of his previous occupations, had not closely participated in India’s fast-evolving telecom industry as it transitioned from landlines to feature phones to smartphones like Pradeep Jain or Sharma did.
Jain, the young man from Meerut who had an engineering degree from India’s top college (IIT—Indian Institute of Technology—Delhi) and a management degree from the Indian Institute of Management (IIM) Calcutta, was just the person Xiaomi was looking for. Jain was also a breath of fresh air in the otherwise uppity world of mobile phone company chiefs.
Jain joined Xiaomi India as managing director in May 2014, just months before its official launch. This marked the second ‘significant (international) hire’ in Xiaomi’s history since Barra’s appointment in October 2013. On 11 June 2014, Economic Times ran a report that read, ‘China’s Xiaomi hires Jabong co-founder Manu Jain to head India operations’. That very month the Xiaomi India Facebook page went live. Very quickly it got some 10,000 likes. This was a signal that Xiaomi could garner fans in India at very short notice and without traditional advertisements. Based on the response of Mi Fans on Xiaomi India’s Facebook page, the company decided to ship 10,000 handsets from China. The logic was simple—if each of the 10,000 fans bought a device, Manu and his team would have successfully sold out the entire inventory.
Until a few months earlier, Xiaomi hadn’t quite decided on launching in India. But India’s home-grown e-commerce firm Flipkart was looking to sew up exclusive deals with phone brands in a bid to ratchet up sales, and its founders Sachin Bansal and Binny Bansal had been to China to talk to Xiaomi. Mihir Dalal wrote in his 2019 book Big Billion Startup: The Untold Flipkart Story:
‘The Bansals had, in fact, been to China primarily to put the seal on a partnership with Xiaomi. Flipkart’s sales team had been courting Xiaomi executives, urging them to sign an exclusive partnership. The hugely successful Moto G phone launch had changed the way brands looked at Flipkart; smartphone-makers that had earlier rejected its exclusivity request were now eager to pursue such an arrangement. But for Flipkart, securing a deal with Xiaomi was paramount, as its executives believed that these Chinese phones would enthral Indian shoppers.’
After several meetings between Lei and the Flipkart founders, the deal was sealed in July 2014. Xiaomi picked the Mi3 device for its debut run, and the whole inventory sold out in exactly five seconds, creating a lot of hype and excitement among its Indian customers.
This excerpt from ‘Xiaomi’ by Jayadevan P.K. has been published with permission from HarperCollins and is being launched on ThePrint’s SoftCover.
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