Facing a sharp drop in smartphone sales and slipping out of the top five brands in India, Chinese electronics giant Xiaomi is pivoting to a value-driven, premium-focused strategy aimed at building a more profitable and sustainable business in the country.
As part of this realignment, the company has started manufacturing tablets locally through contract partner DBG Technology and smartwatches with Optiemus.
India COO Sudhin Mathur acknowledged the shift from a volume-first or mass-market approach to a value-first approach is challenging but necessary.
“At the company level, we need to bring more sustained, stable, and profitable business. The future lies in a higher price band. It is inevitable. The larger objective of the brand is to focus on value, premiumisation, and higher price bands. Even though the journey is not easy, the direction must be set,” Mathur told Moneycontrol during an interaction.
According to Canalys, Xiaomi’s wholesale revenue from smartphone sales in India dropped 45% year-on-year to $47.2 million in Q1 2025, while shipment volumes fell 38% to 4 million units, marking its first exit from the top five since Q3 2016. As per a separate IDC report, Xiaomi saw the steepest decline among major brands in Q1, with shipments plunging 42% from a year ago, dragging its market share down to 7.8% from 12.8% in Q1 2024.
“ Some things didn't work in Q1, but we have corrected them, and you will see results in this quarter as we get back in the top five brands. But reiterating, we are not chasing the top position. We are focusing more on value than volume. We are still very relevant in the market with Redmi and Poco combined,” he added, noting that Xiaomi has restructured into a leaner smartphone portfolio.
Responding to the dip in revenue and volume market share, Mathur said, “Last year, at the same time, we were number one, and it is a matter of time. Earlier, we had too many launches; something or other contributed. We have a much streamlined portfolio, and some things take time to settle in the market. Not being number one is not the end. It’s more about prioritising than giving something away.”
Mathur said Xiaomi’s premiumisation strategy has worked well globally, citing success with its premium smartphones, EVs, and other consumer electronics. The company now aims to replicate that success in India.
“The market here has also started to shift steadily to higher ASP and premium devices. From a brand saliency point of view, we have begun to focus there,” he said.
While Xiaomi remains strong in the sub-Rs 15,000 segment, which still makes up 50–55% of the market, it is actively pushing into higher ASP (average selling price) ranges, particularly Rs 22,000–Rs 35,000, to improve margins and elevate brand perception.
IoT: A profitability driver
As it seeks to reposition beyond smartphones, Xiaomi is intensifying its focus on the Internet of Things (IoT) segment, which it views as a key profitability driver. According to Mathur, tablets, TVs, and wearables are among the areas of growth in India.
Xiaomi works with BYD, Dixon, DBG, Optiemus, and TCL in India to manufacture smartphones, smart TVs, and wearables. Mathur said the company’s existing production capacity is sufficient to meet substantial local demand.
“Both Xiaomi and Redmi tablets are now being manufactured in India. We also started manufacturing our first watch locally, and all watches will be made here going forward. It is about picking categories where it makes business sense,” he said.
Asked whether Xiaomi is working with its EMS partners to encourage more local sourcing of electronic components and increase value addition, Mathur said its partners are exploring such tie-ups. Xiaomi will be open to working with and integrating into their supply chains.
No immediate EV plans for India
Mathur said that, regarding EV plans for the Indian market, Xiaomi’s EV focus will remain exclusively on China for the first three years. “But being a global company, someday things will happen. You must look at product market fit before launching in India.”
Regarding retailer issues, the executive said Xiaomi has adopted an omnichannel model with price parity across online and offline channels, ensuring fairness for consumers and retail partners.
While recent market share fluctuations have raised concerns among some channel partners, Mathur clarified that none have exited the network. "The company continues to expand both its partner network and distribution footprint."
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