Ratan Tata to invest in Chinese company Xiaomi !!!

Ratan Tata to invest in Chinese company Xiaomi !!!

Xiaomi surely does not need Ratan Tata’s investment for its growth. But the association gives the Chinese company the kind of brand credibility in India that few others can give. For a company that sells only online and with small marketing costs, Ratan Tata is a coup.

Ratan Tata’s investment in Chinese mobile phone manufacturer Xiaomi Technology should be seen more as an endorsement of the company than a real investment intended to generate big returns for him.

His mere presence will ensure that Xiaomi expands his footprint in India, the world’s fastest growing smartphone market. The stake given to Tata is probably intended to smoothen Xiaomi’s growth path.

Xiaomi will be hoping that the indirect endorsement of its product by India’s most respected businessman will pitch it into the big league in India, currently dominated by Samsung and Micromax. It comes at a time when home-grown Micromax is on the cusp of receiving fresh funding that would value the company at around $5 billion, according to a report in The Economic Times.

The future belongs to Chinese mobile phone manufacturers who know that they have a huge opportunity to conquer the exploding smartphone market in India. What they need is smart pricing and marketing to get past Samsung and Micromax.

Globally, after Apple and Samsung, the big two in smartphones, the field is dominated by Chinese manufacturers. While market share figures keep varying from quarter to quarter, the current pecking order seems to be something like this: Samsung, Apple, Lenovo and Huawei – followed by Xiaomi.

“Xiaomi epitomised the lean start-up. It sold phones only online – forgoing store costs and retailers’ cuts – and spread its story by winning over Chinese enthusiasts eager for a national champion….Even today Xiaomi spends far fewer marketing dollars as a percentage of sales than Samsung or Apple.”

This is where a Ratan Tata connection helps. The mere fact of Tata investing in a Chinese company makes Xiaomi a credible player in India, even if his actual stake in the company may be minuscule.

Given Xiaomi’s focus on marketing its product without commensurate spends, what it has effectively done is acquired a brand ambassador in Ratan Tata – by getting him to put money in the brand.

Smart, really smart. Smart phone marketing just got smarter.

 

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