Xiaomi ties up with India retail chain to boost sales

By Nivedita Bhattacharjee

MUMBAI (Reuters) - Chinese smartphone maker Xiaomi Inc has decided to sell devices through a leading electronics retail chain in India, part of its effort to move away from online-only sales and boost growth in the world's third-largest smartphone market.

Xiaomi launched its India operations with online marketplace Flipkart.com in July, selling its phones through flash sales where availability is limited to short timeframes.

The company this year decided to sell its Redmi Note fourth-generation (4G) handsets through shops of carrier Bharti Airtel Ltd, but that would still need an online registration.

On Tuesday, Xiaomi said it would sell its phones through The Mobile Store retail chain, as well as expand its online retail presence by adding online retailers Snapdeal and the Indian unit of Amazon.com.

"Some people said we were generating artificial demand. We are trying to increase our supply, to bring more goods into India and to supply them in a free manner to all our partners," Xiaomi's India head, Manu Jain, told Reuters.

Xiaomi, which was not among the top five smartphone makers in India at the end of the December quarter, is under pressure to gain market share in the country, analysts say.

Of the 22 million smartphones shipped to distributors in the fourth quarter, Samsung contributed 27.4 percent while Xiaomi stood sixth at 4.1 percent, according to Neil Shah, director at Counterpoint Technology Market Research.

"India is their growth market now. They have to go offline to scale in India," Shah said, adding the retail expansion was likely to boost Xiaomi's ranking in the country.

With the The Mobile Store partnership, Xiaomi handsets will be available in stores, like products from rivals Samsung Electronics Co Ltd, Motorola, and India's Micromax Informatics Ltd.

Xiaomi's offline foray is in addition to the 100 "service and experience stores" it is opening across India this year to help customers touch and feel its devices, which are sold under the Mi brand. The company does not plan to sell devices at these stores.

"By tomorrow Mi phones are to be available in about 30 to 35 stores. Customers at some point need to touch and feel and they need to buy phones when they need to buy them," said Himanshu Chakrawarti, chief executive of The Mobile Store.

Xiaomi's Jain said the Chinese company was also planning to hire aggressively in India as it plans to invest in the country, starting with a new office and a research and development centre.

The Bangalore R&D centre would be Xiaomi's first such hub outside China, he said.

(Additional reporting by Aman Shah in MUMBAI and Paul Carsten in BEIJING; Editing by Sumeet Chatterjee and Mark Potter)