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Xiaomi likely to soon procure single-brand retail license

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Chinese mobile handset manufacturer Xiaomi is likely to soon procure licence to operate its own branded outlets in India, as part of its effort to increase its offline distribution in coming years, company’s top executive said.
According to a PTI report: Company’s India Head Manu Jain said Xiaomi had in March-April last year applied to the Government for single brand retail licence under the category of cutting edge technology, and expects to get the licence in a few months.
“Our application is pending with the Government. What we understand is that it has been approved by Department of Industrial Policy and Promotion, but finance ministry and others still have to clear it,” Jain was quoted by PTI as saying.
“We are supplying all necessary documents to the Government. We are hopeful that we will get it some time soon, not 100 per cent sure of the timeframe, but hope to get it soon. We have told the Government that majority of phones being sold in Indian market are being manufactured here, it is meeting the 30 per cent local sourcing norm for the licence,” he was quoted by PTI as saying.
Jain further said the single-brand store will be part of the company’s marketing strategy to increase offline foothold, even as it enjoys close to 30 per cent market share online, the channel through which it sells over 90 per cent of its mobile phones in the country.
He said that in order to retain its cost effectiveness in offline sales, the company will adopt the Direct to Retail model to cut down on layers of wholesalers.
“We plan to set up offline base. We will start with 4-5 cities in the next few months, and will be in Ahmedabad in next 5-6 months,” Jain was quoted by PTI as saying adding, “Our aim will be to get 25-30% share offline by the end of this year”.
“Even in offline sell, we will cut down cost by following Direct to Retail model of distribution. We will have one partner in every city and will give directly to them, in order to part benefit to users,” he was further quoted by PTI as saying.
The company sells 2.5 to 3 million units of mobile phones every quarter, 75 per cent of which is being made in India, Jain said.
India had in January 2012 relaxed its FDI norm for single branded retails and allowed 100 per cent FDI in single-brand retail, with condition that 30 per cent of value of goods are sourced from India.

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