Xiaomi, which launched three new smartphones under its Redmi lineup earlier today said that it would decide on price hikes for its smartphones after evaluating the impact of rupee's slide against the dollar. At the end of the launch event, Xiaomi was all set to reveal the prices of the Redmi 6A, Redmi 6 and Redmi 6 Pro, but this is when the interesting thing happened. After announcing the prices, Xiaomi said that these are introductory prices for the first two months and if the rupee value slides against the dollar in the future, then Xiaomi will increase the prices of its smartphones.
"The prices (of phones launched) do take into account the impact...the rupee is at about 71, it takes into account that. This is an introductory price with Diwali coming up. Post that (Diwali), we will evaluate," Xiaomi India Head (Category and online sales) Raghu Reddy told PTI.
Mobile Components are Bought from Suppliers from Japan, US and Other Countries
He explained that manufacturing locally in India helps in this situation as supply chain efficiencies allow passing on the benefit to consumers. However, a large part of the components are paid for in dollars as they are bought from suppliers from locations like Japan, Taiwan and the US among others.
"As the USD continues to strengthen, your costs go up," Reddy added. While he declined to comment on the quantum of impact on the manufacturing cost, Reddy said the company would have to evaluate its entire portfolio and take a call on whether prices need to be revised.
The rupee on Wednesday pared initial gains of the day to drop to a fresh all-time low of 71.96 against the US currency, falling on sudden bouts of dollar-buying by banks and importers. The dollar has strengthened against a basket of currencies overseas as the US economy continued to exhibit strength amid a lingering threat of escalation in the US-China trade conflict, leading to a fall in the domestic unit.
Xiaomi Promises to Keep Net Profit Margin to Under 5%
Interestingly, Xiaomi has previously stated that the company will keep its net profit margin at under 5% to earn the "long-term support" of its customers. Large volumes with small profit margins, it had said, result in "suitable hardware profits" for the company in the long term.
Xiaomi is India's Leading Smartphone Brand for Three Successive Quarters
India is among the largest smartphone markets globally. Shipments grew 20% to 33.5 million units in the June quarter of 2018 over the year-ago period. Xiaomi grabbed the top spot with a 29.7% share, followed by Samsung (23.9% share) and Vivo (12.6% share), according to research firm IDC.
Xiaomi Redmi 6A, Redmi 6 and Redmi 6 Pro Launched in India
Xiaomi has finally launched Redmi 6, Redmi 6A and Redmi 6 Pro smartphones and priced them between Rs 5,999 to Rs 12,999. This range is also among the most competitive segment in the booming Indian smartphone market. All the three models will be manufactured in India. The Redmi 6A succeeds Redmi 5A, which saw more than three million units being shipped in the second quarter of this year.
"At Xiaomi, we believe in making innovation accessible to all our users at honest pricing. With the only smartphones in its segment with 12nm architecture - we hope Redmi 6A and Redmi 6 will be worthy successors in the market with their performance," Reddy said.
He added that Redmi 6 Pro, which features AI dual camera, provides the highest quality in its category.