Xiaomi India raring to go in 2023 after a tough 2022: Muralikrishnan B

Xiaomi is credited as a big factor in India’s 4G revolution. Is there a 5G revolution round the corner?
The history of smartphones in India, the 4G revolution, the revolution in India, and the history of Xiaomi, are somewhere connected. There are a lot of companies, and even individuals responsible for catalysing and fostering this revolution. We put our hands up in claiming not the entire credit, but some of it. And you can trace this way back to 2014 when we launched the first 4G device below Rs 10,000 – The Redmi Note 4G. And we just kept selling fairly standards of this price-value proposition, with dual SIM, so on and so forth, in making this truly democratised, which goes back to our core ethos, philosophy, and principles. Today, 4G is what it is — 600-750 million users. We have shipped around 200 million of them. Therefore, there’s a certain amount of pride when we look back at what we have achieved.

Now, starting 2022, India finds itself at the cusp once again, as it happens with technology, and 5G presents that opportunity. Do we want to repeat some of that magic with 5G that we did with 4G? Absolutely, yes. However, I think this is going to involve a few other elements. Earlier, that jump from 3G to 4G, in terms of experience, was so dramatic, that just having affordable 4G devices itself was sufficient. Now, what does Xiaomi do? We try to check three boxes — The best specs, the highest quality, and honest pricing. That will continue even in our 5G devices. We have launched more than 20 5G devices till date across most price points. Earlier, the majority was above Rs 20,000. Slowly it came to Rs 15,000-20,000 and now we believe Rs 10,000-15,000 is where the sweet spot for 5G will truly lie. What was a Rs 6,000-7,000 4G device will probably be a Rs 12,000 priced 5G device. Because people have become so much smarter, and smartphone usage has become so much more demanding.

With 5G, you don’t want a sub-standard experience overall, like a VGA camera or a 13 megapixel camera is not going to cut it from a user’s perspective. So we will continue doing that. The Redmi 11 Prime 5G is one example. However, I think 5G, without great use cases, is like a fantastic highway, a six lane highway with superfast cars, but nowhere to go to. We need use cases for people to start finding meaning and reason for adopting 5G. Because 5G can’t just be faster than 4G. We have done our surveys and we ask consumers what they want with 5G. They said faster speed, uninterrupted connectivity, and less buffering, which could be a proxy for latency. While that’s a great starting point, I think just those three will be a disservice. It is just so much more capable. Now, to be honest, I can talk about AR/VR, telemedicine, ultraHD streaming, or cloud gaming, but all of this needs to translate into a material benefit for the consumer. Hence, I believe, the big catalyst for 5G will be the coming together for telecom, who is going to roll out the networks, and they are doing that. You have smartphone companies like Xiaomi, and we will continue leading the march in terms of affordable 5G devices with uncompromised experience, and that’s important for us. But I think this is where the content and app ecosystem also needs to come into play. I wish there were more startups thinking of these 5G use cases. And maybe the 5G use cases in India will be different from the 4G use cases. There are a lot of examples for industrial. What are the consumer applications? I think we will have to leave it to the innovation of the ecosystem to chart this out. But from our perspective, we will stay true to this purpose of democratising technology, and launching 5G devices across the spectrum, including the sweet spot which is Rs 10,000-15,000.

So you’re saying the revolution will only happen once those use cases come into play?
Once would be too strong a term to use. As with everything else, all of this will coalesce together, and in some ways, happen together. But I think the big jump forward will happen once we start seeing material use cases like UPI payments which was a killer app. YouTube was a killer app for 4G. What is the killer app for 5G, is what I think the entire ecosystem needs to come together and find that answer.

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There’s also a premiumisation trend happening in the industry right now, with more people buying premium phones. Foldable phones seem to be the big trend this year. What’s in store for Xiaomi fans this year?
We think of premiumisation from totally different lenses. One is premiumisation of the mid-segment, second is premiumisation of flagships. These are two different user segments. We have already seen the premiumisation of the mid segment with the new Redmi Note 5G series. Today, all of us use a smartphone for everything — content, communication, commerce, you live your life on that. EVen the mid-range customer has very, very high expectations from the devices, which is why we have packed so much into the Note 12 series — display, camera, battery, processor, you have to check off all the boxes and get the best all round experience. The Redmi Note series used to be around Rs 15,000-20,000, now it is around Rs 25,000-30,000. That trend will continue for a while. But we are more excited about what we have in store in the flagship segment. You have seen the announcement that we will be launching the Xiaomi 13 Pro in India, which will happen simultaneously with the global launch at the Mobile World Congress on February 26.This actually marks a new chapter for Xiaomi’s growth in India. Because the Xiaomi 13 Pro will not just check off all the boxes in performance, but on camera and imaging, we are trying to set a whole new benchmark. And these devices are co-engineered with Leica, and Leica as you know, are the world leaders in imaging technology. So you have the optical depth of knowledge of Leica with the consumer and technology understanding of Xiaomi, so optics plus hardware plus software coming together to create what could perhaps be an unmatched experience in imaging, and it’s not just a megapixel game we are talking about. We are talking about the richness of the imagery that this collaboration can deliver, and this is a multi-year endeavour. This is the third chapter in the collaboration, and the first time the partnership is coming to the ground for India. In the premium segment, you will need to have meaningful differentiators to shake people up and get them truly excited about what you are offering. We can’t just keep harping on performance all the time. A 60 or 120W fast charging or a 120Hz refresh rate high definition display has become table stakes. There is no story to tell. It is an element in the story, but what you want is something that is going to make people stand up and say, wow I have to try this. I think that’s what this co-engineered Leica partnership brings to the table in the premium end of the segment, and I’m super excited with what that holds for us.

But this is also quite far away from the fan base you have accumulated in India over the years in the mid-range and entry-level segment. And now you are moving in the premium segment. So how are you helping these customers you have acquired over the years go up the price ladder and buy the premium goods, or are you looking at a whole different target audience with these phones?
Our entry into the premium segment is not overnight. We started with the Mi 10 in 2020, then we had the Mi 10i, the Mi 10 Lite, the Mi 11X, Mi 10T Pro, and more I’m forgetting right now. It’s been a series of launches, spanning a few key price points between Rs 20,000 to 60-70,000. We provided multiple price point laddering options, and some of these are also because our fan base has asked us to launch. That always becomes an important part of the communication loop. We keep having this conversation, but unfortunately, Covid was a bit of a bummer, but we tried as much as possible. But it’s not the same as when you meet them in person. So that feedback is also leading to some of these launches.

But how much of your core audience gets converted into premium users? Would you have a ballpark multiplier in your mind?
I never really looked at it from that perspective, because the fan base might run into millions, but it will obviously be the entire pyramid. I’m sure there is a large enough subset, which is interested in these premium devices, which is why we have had the confidence to launch all these. And let me also be upfront in saying traversing this brand journey and increasing the premium acceptability of Xiaomi has also been a journey for us. It would be wrong on my part to assume from ab initio to be accepted as a premium brand. Because we have been known for a certain ethos, which is where for some of these Xiaomi devices, we are using cutting edge technology as demonstrators for our innovation capability. And there is a certain audience that finds meaning in that proposition. And that’s how we are trying to go up in terms of the premiumisation.

Can you take us through the challenges you have faced in 2022, and how you are trying to address that in 2023? With what you spoke about right now, how does that tie in with the challenges you have faced, addressing what went wrong, and how you are trying to get back in the game?
In some ways, you are never as good as your best days, and never as bad as your worst days. That’s true of human life in general, and true of ogranisations. 2022 was tricky. No two ways about it. It was challenging, complicated. So 2020-21, on the back of the pandemic, there was a lot of pent up demand which unfortunately could not get serviced because of chipset shortage. So we were very bullish on 2022, with very aggressive forecasts. But once the Omicron wave died down, that pent up demand just got sucked out. Because people went back to offices, back to schools and so on and so forth. So that demand for two, three devices in the home started drying out. Somewhere, inflation started pinching the entry-level segment. The sub-10,000 segment, which used to be about 40% of the market is now 35% or a tad below that. And that’s a strong forte for us. So the contribution of the sub-10,000 segment declined and inflation has a role to play. Because understand, even if there is a 10% increase in the prices of these devices, that is like 700-800 bucks, which for someone in that price segment who doesn’t have access to credit, is a meaningful impact, and therefore you decide to defer purchases. So the entry-level shrunk. The mid-level segment between Rs 10,000-20,000 was caught in a bit of a conundrum — The 4G/5G dilemma. People know 5G is round the corner. Let’s say you have Rs 20,000 to spend, and this is your second smartphone, you would want 5G right? Because you have been hearing about it all along. But 5G networks still hadn’t rolled out, and people said let the network roll out, or as time goes by, 5G devices will get cheaper, so let me wait. So the upgrade cycles went up. This is also supported by the fact that the quality of devices has improved by leaps and bounds. It will be unfair to say only Xiaomi’s quality has improved. I think in general, everybody’s quality has improved.

So the holding cycles have gone up from what to what?
I don’t think there is any clear data on this. But if I were to take a stab at it, earlier it would have been maybe around 18 months, now it has definitely gone to a little bit above two years now. Even today, we find so many users coming back and saying we are still using the Redmi Note 4, which is a five-six year old device. The fact that he’s had this device for so long gives you that happiness. He will be talking to five people asking them to get a Redmi device. So this happened in the mid-range segment. But the premium segment grew. So therefore, I think we got our forecast wrong, to be very honest. We were stuck with inventory. But we were not alone. I think a lot of players also were stuck with inventory. And that created a lot of pressure. The smartphone business is like the tomato business, it’s like the fish business. If you are not able to sell your stuff in time, then it hurts. You can’t keep inventory for too long, because the value starts depreciating exponentially. And therefore, we also had to keep an eye on our bottomline, so some of those pressures were there. Competition also got more intense. Some of the top players had a lot of intensity from their side. A combination of these factors posed a lot of headwinds in front of us. And we kind of took it on the chin.

But things in 2023 are going to be a lot more different. So here’s what we have done in 2023. One of the mistakes that we made, amongst various other mistakes, I think we launched too many products. I think our portfolio got confusing, even for us. Forget the consumer or the retailer. And this also happens because there’s 4G and 5G devices at every price point, so you want both a 4G option and a 5G option, and then you see price segments get broken up between Rs 10,000 to 12,000 and 12,000 to 15,000, and competition launched a new model in those new segments, so you also want to do it. In hindsight, perhaps not the best of decisions. I think we have learnt our lesson.

We are now going with a far more leaner portfolio. Our portfolio size, the number of models, are shrinking by almost 40%. So very, very clear propositions in every price point.

Next, through our products, marketing and thought leadership, we will ensure we are ahead of the curve on 5G. A cleaner portfolio helps the supply chain, helps the marketing focus, and also helps the channel. Everybody is aligned. I know I have so much to sell, let’s put all our efforts behind it, as opposed to dissipating efforts.

Next, a more harmonious growth of channels. We continue to believe in the power and potential of offline retail. And growing that part of the house is the third key priority for us.

And our fourth priority is to continue to double down on our efforts of localisation and making in India. Of course, the finished goods assembly is already in India, but we also want to expand and further deepen and broaden the component localisation. We started our Make in India journey back in 2015. And it’s come a long way since then. Now we have multiple partners manufacturing our smartphones and televisions, and also other ecosystem products and components. As of 2022, 100% of our smartphones and televisions are locally sourced. But we haven’t stopped there. We also started sourcing components. We initially started with the low-value components — battery, chargers, cables, all of them are close to almost 90-100% of local sourcing, except for maybe the 120W charging adapter is not locally sourced. Wherever there is a gap, we will try and bridge that gap. Then, you have other components such as the housing, or the front and back cover, which are locally sourced today. Camera modules, there is a certain percentage which is locally sourced today. Then we started working on things like the TV remote. We have started working on TV Open Cell.

Around 50% of that is now locally sourced. And we want to further reinforce this commitment this year, and there is a clear opportunity to further deepen and broaden the component sourcing. So wherever we are already sourcing, we will increase the percentage of local sourcing, and then get into newer components. Display is one big area of focus. The vibrator, fingerprint modules, and multiple small die-cut parts, screws, SIM tray, we will get those done locally. On hearables, we are starting to source some of our audio products locally. We are thinking of sourcing things like the battery cell, which should come to fruition this year. So finished goods, mid-level components, and sub-assemblies also we will start sourcing locally. That continues to be our focus area, that will only gain steam as time goes ahead. Effectively, in the next two years, our domestic value addition will increase by over 50%. It’s tough to put a finger on what it is now, but I can definitely by the exit of next year, this will go up closer to the mid-20s in terms of percentage. This includes semiconductor components. Logically, we should exclude semiconductor components, because there is no way to source semiconductors locally. So if you exclude those, our domestic value addition will come close to 30% in two years. Suffice to say, if we are going to grow by 50%, local value addition will be in the mid-20s.

A lot of companies are benefiting from the PLI scheme. Why aren’t you a part of the PLI scheme yet?
As a policy, it’s a smart and well thought through policy with differential criteria for foreign EMS and domestic EMS. However, there are also constraints and considerations in terms of the price points at which the PLI benefits are available. I don’t know how much of our portfolio is below $200, so it probably does benefit us, but it definitely puts some constraints on how best to avail it. However, we are in conversation with domestic manufacturers where the criteria is different. From that perspective, the PLI benefits are a lot more meaningful, and that’s what excites us about the PLI scheme. Some of these conversations are on, and we hope to see them come into fruition this year. There are only five domestic manufacturers eligible under the PLI scheme. We are trying to talk to some of them.

God willing, once that happens. What’s the kind of differential that you might or the consumer might see in terms of pricing?
Some of these conversations are on, and it will be premature for me to talk about what would be the net consumer impact on that. Once the commercial conversations conclude, and we look at the BoM impact, it will be more appropriate. I will definitely circle back to you in the future when these numbers are done, but I’m hoping there is a material impact.

The government scrapped duties on camera lenses and continued lower duties on things like Li-on batteries. How does that benefit Xiaomi and the ecosystem in general?
Sometimes budget announcements should also be read for the directional impact that they are signalling. To be honest, the duty reduction on camera lenses is more important for what it is signalling, than an actual numeric benefit. It shows an openness to figure out how to incentivise domestic manufacturing and local value addition, which I think is the right thing the government is thinking of. I wish there was some announcement, or there can be in the next few months, an announcement on let’s say a PLI scheme or some form of an incentive framework for domestic manufacturing. Because look, there is a price differential, and a nicely well thought through incentive structure can help bridge some of those disadvantages to encourage us to source more locally. The way you need to think about this is, what is the contribution to the BoM, an/d what is the domestic capability or disadvantage? Think of it like a two by two matrix. There are some components where the percentage of BoM is low, and the domestic capabilities are already there. Battery, chargers, cables, etc. Those do not need an incentive. The onus is on smartphone companies to deepen the association, something I’m committing to. And then there are those where the contribution to the BoM is high, and there is a capability or cost disadvantage. Display and camera modules are examples. It’s not that the capability does not exist, but relative capability is on the lower side. There needs to be technology transfer and capability building, as well as some sort of a fiscal incentive to bridge the gap. Ultimately, all of these are commercial entities. Even if you consider PMP, if it is still working out to be more expensive, then you will wonder twice. So, wherever there is high BoM contribution and domestic disadvantage, that is where the government can create policies to nurture and bootstrap. Once the economies of scale kick in, then your costs will start coming down, and the differential will get bridged. But that initial pump priming is required. That is what we are hoping for, maybe at a later date, but if that comes, it will definitely encourage us to further accelerate localisation. We are committed to doing this, but I think some of these will only help us accelerate it further.

Whatever happened in the legal side of things, in terms of royalties and others, did that take away some amount of focus for Xiaomi as an organisation, that contributed to some of the challenges you faced in terms of market share? You also lost key personnel.
The first point is our confidence in our position, vis a vis, these investigations. We have spent countless hours trying to understand the accusations and understand our stance, and I can state with absolute conviction that we are extremely confident of the stance we have taken. We are law abiding corporate citizens, and whatever we have done is in accordance with the law. So from our position, we are very confident. There have been investigations, and we have been fortunate to have some strong and smart people within our organisation, who have been front-ending conversations as far as these investigations are concerned. To that extent, we have successfully managed a structure where the rest of the organisation can get sandboxed from the involvement in these investigations.

However, let me also be candid. When you are in the news for not the right reasons, can there be an impact on employee and partner morale? Yes. It would be wrong to say there has been no impact. In my role, and for the rest of the leadership team, we have been open, candid, and available to keep explaining. We have internal townhalls every month. We have increased the frequency. If we don’t tell our people, they will hear from outside and they will have the wrong conclusions. So we have upped the level of internal communications, both formal and informal. I’m always available for those. And conversations like these, with eminent media houses will also help clear the air. Perhaps, for some parts of 2022, we have not communicated that much. That’s something we realised, and we are absolutely willing to correct and set the record straight. To answer your question, did that impact some of the business trends, it will be difficult for me to say, but I can definitely say it has impacted morale, but we are doing the right things to address it.

To the point of attrition, if you look at a lot of people, we have had a great team and continue to have a great team. But it is a reality that we have also lost some of our top leaders. But the average tenure of these leaders that you have lost is close to six years. These are the guys who have built Xiaomi and they have grown with us. If at a certain point, in their career as professionals, they aspire for different things to do, I can understand where that comes from. There has never been a bitter exit in my time as Xiaomi. The alumni continue to be great champions of the brand. And therefore, if some people believe they can find better careers, meaning and adventure outside, we understand and we are supportive of it. But we also have built out a great bench. There have always been people, deputies, number twos in various functions, be it offline and online sales, category leads, GTM teams, there have always been people who are getting trained, groomed and nurtured, to take on that role. And hence, business, per se, continues. Do we miss some of those people? Yes, but as friends, but not necessarily from the way day to day operations are continuing. And you should realise that despite all this, among the senior leadership team, there are still a huge number of long tenured people. I have been around for four and a half years. So broadly, if I look at the rest of the leadership team, the rest of the organisation, our attrition has been at par with the industry. Everybody has seen attrition. That’s the reality. So while I feel bad that some of our friends have chosen to work elsewhere, from a business perspective, as a leader, I don’t lose sleep over it.

Does the court ruling, for instance, you are not allowed to use a large chunk of the cash, constrain your spending capabilities? Is that a tangible operational challenge you are facing?
We have been a cash-flow generating business. Yes, some of these do constrain us. It will be wrong for me to say it has no impact. That would be incorrect. However, I think there’s enough cash in the business to keep the operating cycle continuing. The income tax case, the High Court ruled in our favour, and we hope, sooner or later, with full faith in the judiciary, justice is done, and we hope to get back to the good old days all over again.

As a result of the investigation, has that prompted you to relook at some of the structures of the royalty agreements that you have with your parent company, or with any of the prospective partners that you pay royalty to? Is that an ongoing process now?
When you have taken a stance that what you are doing is completely in accordance with the law, you are talking from a position of confidence and strength, that becomes a fundamental underpinning of our thought process. But, as any mature, responsible corporate, you are always looking at what are the other things one should consider. I mean, some of those conversations are on. The fundamental stance, we believe, continues to remain sound. Unless forced to, we will find the reason to consider alternatives. But not strongly, because we believe fundamentally, we are on the right side.

With the structures and corrective measures you have put in place for 2023, what’s your estimate now? Is the slip to number two, as per some market trackers, some sort of a temporary blip? Do you expect to push back and get back to your rightful place if I may call it?
Xiaomi is like this adolescent who is getting used to now thinking what does being a young adult mean. In this process, you also start doing deep thinking about what it is that you really want to aspire towards. We have had conversations internally on what we are chasing. Of course we want to be number 1. However, we are now internally starting to say, being trusted and loved is perhaps more important. Being a smartphone and AIoT player, where the AIoT portfolio and smartphone portfolio mutually reinforce each other, and that multiplier effect makes us stronger. So being loved and trusted, driving this smartphone times AIoT synergy, focusing on efficiency and sustainability, and having a good, strong secure foundation.

If 2022 has taught us anything, it is to have a good, strong foundation. Those are things we believe are a lot more important for us. And you can see the transition from being a startup with exponential growth of eight-nine years, to saying I have to keep running the race for decades now. So how do you prepare yourself for that race? So we are also fairly clear on what this means for 2023 and beyond. So focus on being loved and trusted, smartphone times AIoT, efficiency, sustainability, secure foundation — You will find us talking that language a lot more going forward.

What has been your fiscal revenue numbers in FY 21 and FY22, and where do you see yourself in FY23?
We don’t disclose country level numbers, though, I can tell you that the smartphone market in India, by volume, might be flat or slightly negative in 2023. Different people have different points of view on it. While we have had a good start with the Redmi Note 12 series, we still see some challenges in the entry-level segment. And 5G is still to take off, networks are still getting rolled out. I’m just waiting, fingers crossed, on what IPL means for 5G. I feel it could just be the defining moment for 5G. And if that happens, I think you’ll see a lot more positivity, not just from me, but from many other industry leaders. But the market will continue to have some headwinds in 2023. I would see marginally negative sort of a growth in shipments. Value might go up a little bit. With increased contribution of 5G, the ASP will go up. Also, with the entry-level share reducing, this will be another slightly challenging but less so than 2022.

Xiaomi has traditionally relied on below-the-line marketing to promote your products. You have not been very aggressive in our advertising, but now with demand dwindling, do you see a need to go back to TV commercials, bank on the IPL season to revive the demand for your products?
The objective for Xiaomi’s marketing can be broken into two-three buckets.

One is to acquire new customers, two is retain existing customers, and third is to upgrade existing customers, and maybe fourth is to cross-sell your AIoT portfolio. There could be four large objectives.

Xiaomi has shipped 200 million odd smartphones, and has an active user base of somewhere around 130-140 million. Roughly assuming there are 600 million mobile users in the country, almost one-fourth is Xiaomi. So our number one priority for this year is to ensure that we retain as much as possible of this 135 million which is coming up from an upgrade, and try and see how we can get them up the price point. Therefore, our entire CRM is bridging between online and offline, leveraging our exclusive assets, and ensuring that we tie everybody in the CRM and customer engagement program, backed by the power of our community. That becomes a large area of focus for us.

The second priority is cross-selling and upselling. Our focus is to drive that smartphone times AIoT gameplan, and you will see this increasingly spoken a lot more from our side. Because the more data we see, the more it convinces us that these two reinforce each other. They increase customer engagement, they increase customer lifetime value. And it’s not just us. A large international technology company out of the US has demonstrated this very well. And therefore it’s important for households to have multiple Xiaomi devices. There are 300 million households in the country. Can everybody have at least three Xiaomi devices? Imagine what that future will look like for Xiaomi. And therefore, our direction will start going in that space. However, in the interest of premiumisation, let’s say this entire collaborating with Leica story, that will require some firepower to convey that message across. Let me support it above-the-line for this. For the Redmi Note 12 series, we will continue to leverage our digital marketing and social media, which is our bread and butter marketing. For this, I believe CRM is what will fit the market. I know this is a convoluted, long winded answer. But it’s important to step back and think of what’s my objective. What’s my message? What are the right channels to pursue as opposed to an overarching thing saying this time we will do IPL. That’s not the way we think. We are conservative when it comes to spending. Efficiency is important for us. Therefore, every last ounce of efficiency will need to get juiced out. There are some brands for which IPL makes a lot of sense. I don’t know whether Xiaomi this year is one of them.

But is that also the function of the cash constraints you face?
No.
Do you see an increase in your marketing spends this year over last year and the year before?
Like I said, the entire notion of efficiency and sustainability becomes more important. So we, I don’t know whether it will be an increase or decrease, but spending it on avenues where my returns are much higher, is something that we will do. 13.5 crore people is a large number, and if I could just ensure that the bucket is not leaking, that I can continue to retain them and sell my Redmi Note and Xiaomi series phones to them, we will see through this.

Financing seems to be a key factor in converting users from the mid-range to premium. But at the same time, Xiaomi shut down the Mi Credit app. So how do those two come together?
Affordability, financing plans in offline or even online and Mi credit, and financial services are two very different stories. Mi credit was like a marketplace platform for consumer lending, not device lending. Let me establish that. Now coming to the story on device financing, consumer adoption of these financial solutions have only increased, both credit card and NBFC lending. The demand for long tenure financing has gone up. Exchange also plays a very important role because the cost of upgrade comes down substantially if you bake in exchange into the mix. Contrary to our thinking, let’s say in the first few years of Xiaomi’s business in India, I think we are increasingly understanding and leveraging the potential of affordability and exchange solutions, specially in the offline space, where there is an ability to influence the consumers decision making process. Between two alternatives, if you have to Rs 5000 rupees more for the second device, that effectively means 800 bucks a month. To me, this is simpler and a much better proposition. And we’ve been doing that for the last three years. Now, it becomes a very internal call whether you do this through your own white label solution, because even there the underwriting is done by a third party NBFC, or you partner with existing NBFCs like Bajaj Finserv who have deployed the existing network. They have the relationships, they have the customer data, they have the processes all set out. And we have very good relationships with all the large device lending companies in this country. And we only hope to continue strengthening that by keeping thinking of these solutions. Let’s say it’s an expensive product, how do you increase the tenure, or exchange bump up. We did this for the Redmi Note 12 series. If you’re an existing Redmi customer, you get an additional bonus if you exchange. Look at the way we have tried two objectives elegantly together. That’s a CRM retention exercise. At the same time, it gives me an opportunity to upgrade customers. These are the high ROI initiatives that we get excited about.

Where do your financing schemes figure? Is it primarily for your premium range, or for the entry level segment as well?
So most of the financing schemes are offered in the mid to high-end segment. I think anything above Rs 12,000 we typically offer financing schemes, but the tenures differ. Entry level becomes tricky largely because a majority of that segment doesn’t have a credit history. And without credit history, third parties and NBFCs find it difficult to underwrite that transaction and collections become difficult, and so on. So perhaps that’s where maybe some of the operator’s lock solutions can start becoming meaningful, and there are a few conversations on that.

Which side are you on in this entire Google CCI standoff? Is that beneficial or challenging for Xiaomi?
I think any solution that emerges from this needs to be a win-win for three parties involved — The customer, brand, and Google. Taking care of course, the guard rails that the government has set out. It is with that philosophy that we will want to approach any way forward in terms of how to interpret that ruling. It’s important to keep the interest of all three in mind.

So has this ruling meant that you had to go back to the drawing board with Google in terms of restructuring some agreements?
I am not privy to those conversations, as some of these are driven globally.

Where are we on the global supply chain issue?
Mostly behind us. We’ve seen those big COVID waves in China and I don’t think supply chains got disrupted. Somewhere, I think agility and resiliency seems to have become second nature for all of us. We just learn to live with some of that and ensure that stuff is not disruptive. I think those days are behind us.

You talked about how you are in talks with Indian EMS players to see if you can benefit from the PLI schemes and cut down on the cost disabilities vis-a-vis your China manufacturing. If that works out, are you planning on exports from India through the Indian EMS players?
We would love to do exports. We already do that in a small fashion to some of our neighboring countries, Nepal Bangladesh, and so on. I would see that as a two stage process. Number one priority would be to broaden and deepen the competent ecosystem and focus on increasing domestic value addition because that’s a clear contribution to the economy, while you continue to explore opportunities to export, because that’s a much larger strategic decision. Does the intent exist? Absolutely. Yes. But perhaps we’ll have to work around. I don’t have a firm answer if it will be from this year. But the intent definitely exists. A few things have to fall in place in this jigsaw for us to start doing that.