Chinese Smartphone Maker Xiaomi Targets India As Part Of Strategy To Challenge Apple, Samsung Globally

Xiaomi, a Beijing-based electronics company that has outsold Apple Inc.’s (NASDAQ:AAPL) iPhone in China, will now target Samsung Electronics Co Ltd (KRX:005935) and other local favorites in India's booming smartphone market.

As part of its strategy for the subcontinent, Xiaomi has partnered with Flipkart.com, India’s largest e-commerce company, to sell its new Mi3 handset, starting Tuesday for 13,999 rupees (about $232). However, Indian is expected to be a challenging market for Xiaomi as 60 percent of the market is dominated by Samsung and local favorites such as Micromax Informatics and Karbonn Mobiles, which, like Xiaomi, offer inexpensive devices with high-end features.

“No one knows Xiaomi in India,” Katyayan Gupta, a technology analyst at Forrester Research Inc. (NASDAQ:FORR), told Bloomberg. “I don’t even know their phones. They’ll have a lot of education to do. It will help them to tie up with a trusted brand in India.”

Xiaomi’s effort to attract India's smartphone users is reportedly part of CEO Lei Jun’s goal to quintuple smartphone sales to 100 million units by 2015, and pose a serious challenge to industry leaders, such as Samsung and Apple. Xiaomi is also planning to begin selling smartphones in 10 new markets, including Brazil and Russia.

Although the company’s Mi3 smartphone will retail at less than a third of the cost of an iPhone 5s in India, the device will offer top-quality specifications, including a fully high-definition screen, a 13-megapixel rear camera and a Qualcomm Snapdragon processor.

In addition to Mi3, Xiaomi will also offer two more handsets, Redmi 1S and Redmi note, for 6,999 rupees ($116) and 9,999 rupees ($166) respectively, according to the company's Indian website.

The company, which was China’s third-largest smartphone vendor in the first quarter of 2014, will also reportedly strike deals with other companies to set up 34 service centers across India and will appoint software developers to build applications tailored for Indian users, Bloomberg reported.

According to Hugo Barra, vice president of Xiaomi, the company wants to take advantage of Flipkart’s experience in selling smartphones in the country. The e-commerce company recently partnered with Motorola Mobility to exclusively sell the Moto series of smartphones in India, and according to Flipkart CEO Sachin Bansal, the portal reportedly sold one million Moto smartphones in five months.

“Motorola is a known brand, people here know what Motorola is, so buying those devices online would be easier,” Anshul Gupta, an analyst with Gartner Inc. (NYSE:IT), told Bloomberg. “Initially, it’s going to be a challenge for Xiaomi.”