Impact of Xiaomi after Narendra Modi's “Vocal for Local” Mantra (Post-Facto-Analysis)

Xiaomi is the Chinese Smartphone that has a presence in 90 locations across the world and commands a strong foothold in India. According to IDC, in Q3’19, Xiaomi sold 12.6 million smartphones and contributed to 27.1% of the Indian smartphone market. However, after the announcement of #VocalForLocal by the government which stressed manufacturing and consuming local products, managed to produce shirk among Indians. This sentiment to go local was further boosted by the Galvan border clash with China which left 20 Indian soldiers dead.


Amidst the border tension, a scheme known as Production Linked Protective (PLI) was introduced to provide a 4-6% incentive on incremental sales on goods manufactured in India. Micromax, which had lost the market to Chinese smartphone makers in 2016; quickly picked the fund backing option as an opportunity to make a comeback with #Micromaxisback. The company is going to launch such “locally made” smartphones by the end of 2020. Further, Reliance Jio, the telecom giant is also aggressively planning to manufacture 200 million “affordable” smartphones by 2021 to hit the rural segment.


According to a survey conducted by Mobility on whether Indian smartphones will be able to come back, where respondents included Brands, Retailers, Distributors, and other stakeholders; the data revealed 50% of respondents believed that local brands will win. Also, it can be inferred based on the pie-chart below that if Indian smartphone makers can convert neutrals (approx. 20%) to favor them, then 70% support will be quite an optimistic scenario to be in.


Check a 2X2 Local for Vocal Matrix created by Gunjan Solanki for clear understanding of Vocal for Local meaning.





As #VocalForLocal” seem to gain momentum, what can Xiaomi do to hold the market share as usual? Below are a few frameworks to understand the same:




1) SWOT analysis for Xiaomi

SWOT analysis can expose the strengths and opportunities for Xiaomi, on which it can either improve or build a strategy around it to grab the opportunity. It can also identify where does the company lack which is essential information for a company to reduce risk.

Inference & Strategy: As most Indians have low to middle disposable income but still witness rapid demand for smartphones; a product being high in quality and low in price is the most attractive option for such a market. Secondly, as Xiaomi has a high-profit margin due to low manufacturing cost and economies of scale, it should invest in availing cloud services in the smartphones to attract tech savvy customers in the urban market. It should also invest in rigorous marketing and promotional activity to build brand image. The company should also invest in building offline distribution channels through franchises to reach rural customers mostly. Moreover, Xiaomi should also build more customer care centers, train the executives to provide an effective solution, and be fluent in at least one regional language.

2) Competitor matrix for Xiaomi

As Micromax is making a comeback in the smartphone market amidst the “local” sentiment, it becomes crucial for Xiaomi to analyze and compare itself with Micromax’s capabilities and strategies.


Inference & Strategy: Few pivotal aspects which provide Jio and Micromax a competitive edge over Xiaomi are- targeting rural customers (represent 65% of India) with highly affordable smartphones. Also, they have significant offline distribution channels to serve more customers, apart from online customers. Moreover, Micromax seems to target customers involved with the gaming industry which constitute 300 million gamers. Covid-19 induced lockdown boosted the increase of such gamers. Xiaomi should also invest to offer such facilities to the customer, which coupled with product features and quality will prove to have an edge over its rivals.


As the strategic frameworks mentioned above revealed some intangible aspects which, if improved on, can reinforce further the value proposition which Xiaomi has already created; there is one major tangible aspect, which is sentiment for “local products” that needs to be tackled well. To counter-balance this, few strategies which the company could implement are as follows:


· Partnership with manufacturing plants in India to manufacture not only smartphones but Printed Circuit Board Assemblies (PCBAs) as well to make completely local goods and introduce the “Made in India” tagline.


· Sponsor Indian Premier League (IPL), which attracted 26 crores, viewers, during IPL’s opening week in Sept’20 (Decan Chronicle); to show support for Indian events to such a large audience.


· Launch animated emojis/GIFs especially designed for Indian festivals in Xiaomi smartphones for customers to share emotions of celebrations and “feel” more Indian.


Further, it is important to understand the forces that are shaping competition in the smartphone industry to analyze the competitive scenario at a broader aspect. This framework will be extremely important for Xiaomi to adjust its strategy to suit the competitive environment. So, for this, the application of Porter’s Five Forces is as below:

Supplier Power: Xiaomi partnered with the biggest chipmakers including Foxconn, Wintek, Sharp, and Qualcomm. As these suppliers are highly reputed and multiple smartphone makers source their chips from such giants, they have an edge to bargain with Xiaomi.


Buyer Power: As there are many substitutes available for Xiaomi, in terms of both local and non-local brands, customers have an option to switch to other companies to get the same quality, product features at a comparable price or even price lower than what Xiaomi offers.


Threat of New Entrants: With the “local” sentiment rising in India, which Indian smartphone makers are clearly going to take advantage of, will introduce multiple new entrants in the market.


Threat of Substitutes: As there are other Chinese smartphone makers like Realme, Oppo, Vivo, who enjoy a similar competitive edge as Xiaomi in terms of low labor cost, high-profit margin, similar target market, etc., there is a high chance of Xiaomi getting substituted. In fact, Oppo registered a whopping double-digit growth of 83% in terms of shipments in Q1 2020.


Competitive Rivalry: Rivals for Xiaomi were anyway quite high due to the presence of bigger brands like Samsung, Apple, etc., which is now further boosted by Jio and Micromax entering the market space.



A brand is a symbol or logo, which differentiates it from its competitors based on its Unique Selling Proposition (USP). This USP creates value proposition and brand equity in minds of the customers which ultimately leads to brand positioning based on quality, price, ease of reach, excellent customer service, strong brand image, etc. Customers ultimately buy products of those companies which could strike the cord of the customer the most with their USP.


Thus, even if “vocal for local” sentiments are currently high; the brand which is able to create the best USP and provide the most value proposition will eventually win the game. Customers will not buy smartphones just because they are made in India, because the “local” sentiment will eventually fade-off to give way to products that will meet customers’ demands.


Author: Suranjana Banerjee


Recent Posts

See All

© All rights reserved by Marketing Weekly

  • LinkedIn
  • Instagram
  • Twitter