In an exclusive interview with Dhaka Grandstand‘s Zisan Bin Liaquatthe country manager of Xiaomi Bangladesh Ziauddin Chowdhurytalks about how the brand achieved the number one position in the local smartphone market and overcame policy challenges in the smartphone industry
When did Xiaomi enter Bangladesh? What are the areas that she is working on?
We officially started operations in Bangladesh on July 17, 2018. It has been more than four years of our journey here and in this time we have been able to establish ourselves as a leading smartphone brand in the country.
Xiaomi originally started with MIUI which was a software in 2010. Then over time we introduced smartphones as our first hardware product and slowly built it into an ecosystem of connected devices across all categories based on customer demand and requirements. Username. Innovation for all has been an integral part of Xiaomi’s DNA and that is exactly what we aim to do here in Bangladesh as well.
According to Counterpoint, Xiaomi became the No. 1 smartphone brand in Bangladesh with a market share of 28.8%. How did the brand achieve this?
Mainly, what has served us best is staying true to our vision of the best specifications, the highest quality and honest prices.
Being a customer-focused brand, we are always looking for insights into changing trends, behavior and consumer requirements.
In the last four years of operation, we have introduced products in all price segments, offering features that best suit the user’s requirements.
With an unwavering focus on quality and customer experience, we’ve always looked for ways to democratize technology and make it more accessible across the country.
In addition, the production of our local factory has played an important role in achieving the number one position in the market. By establishing a factory in the country, we are now able to offer better devices to Xiaomi fans at relatively affordable prices.
What factors have played a more impressive role in the growth of Xiaomi in the country?
Xiaomi works with a ‘Fan first’ approach. We have a huge global community of passionate users who are intensely loyal to the Xiaomi brand and actively contribute to the company’s product development.
In addition, one of Xiaomi’s promises is to ensure local leadership. Considering that, almost all human resources employed by Xiaomi Bangladesh are local till date. Our vision is to become a global local company.
Xiaomi is the only Fortune 500 brand in Bangladesh, where almost all employees are Bangladeshi. In addition, we have also been working to provide excellent brand experience to customers since we entered the Bangladesh market.
We have developed a three-pronged business model, including hardware, Internet services, and retail, and we are working to achieve these goals. More than 3,000 young and energetic people work tirelessly for the Xiaomi brand in Bangladesh.
We constantly keep up with the global market and launch new devices in the country at the same time for Xiaomi fans.
As the 5G expansion began, we also launched 5G-enabled devices, such as Xiaomi 12 Pro, Xiaomi 11T Series, and Xiaomi 11i Hypercharge, keeping in mind the youth of the country.
What kind of smartphone is now being manufactured in the Xiaomi factory? How many people work in your factory?
The local factory supplies about 95% of the demand for Xiaomi smartphones in the country. All entry-level and mid-range phones like Redmi 10A, Redmi 10C and Redmi Note 11 are now made in Bangladesh.
Now, more than 450 people are employed in the Xiaomi factory. More than 1,000 tech jobs are likely to be created in the future.
In this year’s budget, the government has withdrawn the benefits of VAT exemption for mobile phone companies in the commercial phase. How has the industry been affected by this?
In the budget for fiscal year 2022-23, the exemption benefit of 5% value added tax (VAT) at each stage of the mobile phone business (from marketer to retailer) was eliminated. It should be noted here that there are three to four levels of distribution channels for mobile phone companies down to customers.
Therefore, the new VAT is applicable for these stages before the phone reaches consumers, causing the price to increase greatly.
Apart from this, the price of smartphones has already increased by more than 20% in the market just like other products due to the upward trend of product prices in the world market amid global economic uncertainty.
Given that 13-14 companies have already invested significant amounts of money in making mobile phones in the country, will phone manufacturers be put off by the withdrawal of the VAT exemption benefit?
The withdrawal of VAT facilities definitely discourages manufacturers.
We know that it is fundamental and important to collect VAT and taxes for any country. At the same time, we have to prioritize some important sectors.
Today, VAT is imposed at the retail level, but they are not trying to stop illegal markets or gray markets. As gray products are sold through unauthorized channels, it remains untraceable, which encourages money laundering.
In addition to raising taxes, the gray market must also be stopped through strict law enforcement. It is normal that taxes may increase, but it is detrimental to the sector if the increase in taxes and the expansion of the gray market continue simultaneously.
Our neighboring country, Nepal, recently began to disable all unauthorized phones from its telecommunication networks. In addition, neighboring countries have also taken the necessary measures to stop the sale of unauthorized phones.
But unfortunately, despite our technological capabilities, it is not being implemented in the country.
What needs to be done to keep investment flowing in the mobile phone manufacturing sector?
Investment is highly dependent on economic stability at the micro and macro levels. We believe that most brands will now place more emphasis on managing the current global economic uncertainty.
But it is also important to have the correct and consistent policy to support investment in the manufacturing sector.
In addition, it is extremely important to formulate a favorable smartphone export policy.
For example, our current export policy requires a minimum value added of 30% for locally manufactured phones to earn cash incentives. But since smartphone is an emerging sector in Bangladesh, this condition should be relaxed for smartphone export.
Apart from this, domestic brand owners and distributors should also have the opportunity to export smartphones like other countries. This will further enhance our export growth potential.