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Xiaomi additional localizes the Indian provide chain by way of BYD and DBG partnerships

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China’s Xiaomi had dominated the Indian smartphone market for three years in a row until it recently lost top spot to Samsung. It has followed the Indian government’s set of rules to support domestic manufacturing and making smartphones in India instead of shipping them from their home country of China. Now production in India will continue to grow by adding two new supply chain partners, BYD and DBG, the company said in an announcement on Thursday.

The move comes at a time when the Indian government is putting more pressure on Chinese tech companies. Along with TikTok, dozens of other popular Chinese apps were banned in India last June due to national security concerns.

So far, hardware companies have remained largely untouched, but a deterioration in India-China relations is unlikely to be a good sign for Chinese companies courting Indian consumers. Xiaomi and its Chinese competitors Vivo, Oppo and Realme, which are affiliated with Oppo, together had a 64% share of the Indian market in the third quarter of 2020.

This is probably the time for Chinese companies to demonstrate to the Indian government how they can contribute to the local economy. Under the new manufacturing partnerships, Xiaomi will be able to significantly increase its production in India, the company said.

The cooperation with BYD and DBG also reflects the growing trend of Chinese manufacturers to set up plants overseas to cope with rising labor costs at home and the increasingly hostile trade policy towards China. BYD is China’s largest electric car manufacturer with a long history of manufacturing electronic parts, while DBG has been a key supplier to Chinese telecommunications companies like Huawei. DBG has set up a production facility in Haryana and increased the local production of Xiaomi by around 20%. The BYD plant in Tamil Nadu is scheduled to go into operation in the first half of this year.

Prior to his contracts with BYD and DBG, Xiaomi was already manufacturing 99% of its smartphones in India through long-standing contract manufacturers Apple, Taiwanese giant Foxconn and California-based Flex.

Xiaomi also emphasized that it locally sources and buys motherboards, batteries, chargers and other components from domestic suppliers such as Sunny India and NVT together they account for over 75% of the value of their smartphones.

Separately, Xiaomi’s India business has won a new partner, Ohio-based Radiant Technology, to manufacture its smart TVs, which were a bestseller in India. Local electronics company Dixon is currently making its smart TVs.

Xiaomi’s localization efforts have resulted in a 60,000-strong team in India six years after it first landed, including people in production, sales and logistics. The company prides itself on promoting local employment. As Manu Kumar Jain, CEO of Xiaomi India, pointed out in toay’s announcement, the company hired 10,000 people in India last year. “As companies reduced their workforce, we focused on putting together the building blocks for our growth in the Indian market – our people.”

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Katherine Clark