Chinese smartphone-maker Xiaomi, one of the leading brands in the Indian market, claimed it has generated employment for 50,000 people in India and recently sold one million devices in a single day through its stores.

The company stated that the jobs it had generated included corporate employees, partners from manufacturing, after-sales, offline sales and logistics units.

Xiaomi’s manufacturing partner contributed a major chunk – more than 30,000 employees of which more than 95% are women. The Chinese company directly employs more than 1,000 people in its corporate headquarters in Bangalore and five regional offices.

According to Counterpoint Research, in the third quarter of 2019 Xiaomi garnered a 26% market share and recorded 7% growth in its year on year shipments in the world’s second-largest mobile phone market. This was mainly due to the good performance of its models in the online segment.

Xiaomi started manufacturing phones in India in 2015 in partnership with Chinese contract manufacturer Foxconn and now has six manufacturing facilities in Andhra Pradesh and Tamil Nadu.

Initially Xiaomi’s phones were sold only through e-commerce channels. It began selling phones offline in 2017 and in a short span of time has built an extensive network of exclusive and partner stores. Now the phones are sold in more than 2,500 Mi Stores, 75 Mi Home and 20 Mi Studios and over 7,000 Mi Preferred Partner stores.

Xiaomi claimed that on January 10 this year it sold more than one million devices, mainly smartphones, in a single day. The devices sold included smartphones, Mi TVs, Mi Ecosystems and accessory products. It is also the market leader in the smart TV segment.

Smartphone manufacturing has grown tremendously in the last five years. In 2014 there were only two manufacturing units, but in 2019 it has risen to 268 handset and manufacturing units.

But the Indian government’s recent move to cut export subsidies for mobile phones has not gone down well with manufacturers. A new government notification has reduced the Merchandise Exports from India Scheme – an export subsidy program – by half from 4% of the freight on board value of the product to 2%, effective from January 1.

The reduction has made Indian phones uncompetitive in the global market where they compete with Vietnam and China, the two leading exporters, for orders.

Leading mobile phone makers have stopped taking fresh orders for exports. The Manufacturers’ Association of Information Technology, the apex body of electronic product makers, has urged the government to restore the incentive.

Xiaomi has also sought a reversal of the government move, saying it would affect the business significantly and threaten ongoing and future investments.

Concern over Huawei

For its country rival Huawei, the journey to tap the 5G network gear market in India has been an arduous one. A blacklisting by the US administration has made the Indian government cautious about granting permission to Chinese companies to take part in the forthcoming 5G trials.

After many deliberations, the Indian government allowed Huawei to take part. The Chinese telecom gear maker has teamed up with mobile service providers Bharti Airtel and Vodafone Idea, who have submitted applications to the government to conduct 5G trials. The last date to submit applications for trials was January 15.

The government plans to deploy the 5G network in the country on December 31 and finish the trials by March.

However, the army has red-flagged the possibility of Chinese 5G services being introduced in the country, saying there is a huge security risk and that such services could compromise the entire command and communication structure of the Indian military, The Print reported.

The army, along with the navy and air force, had given inputs on the 5G technology to the government like many other agencies and departments. The Narendra Modi government finally decided to allow Huawei to participate.