Chinese handset maker Xiaomi is looking to acquire starts-ups in India, in a bid to tap into local talent for its expansion plans.

“We are in active discussions with at least one Indian start-up,” said Hugo Barra, Vice-President (International Operations), Xiaomi.

Most of the acquisitions have been in China, where it has investments in 55 companies. Most of these are hardware companies. Barra said the focus in India will remain on software and Internet companies, since there aren’t enough innovative hardware start-ups.

The Chinese firm will soon expand its portfolio beyond smartphones in India, with the launch of Air Purifiers later this year. “We are planning to introduce multiple product categories beyond mobile handsets. To begin with, we will launch air purifiers later this year,” Barra told BusinessLine .

“Pollution is a serious problem, especially in cities like New Delhi. It therefore makes sense to bring our air purifiers to the market,” he said. Barra said the company has sold more than 1 million air purifiers in China.

Barra said the company is working on partnering with content companies, including news apps and video content companies, before it launches other products like the company’s smart TV. “Network has been a big limiting factor in India for video consumption on mobile. With 4G services coming in, we expect a gold rush in this space,” he said.

Offlines sales

As far as mobile business is concerned, Xiaomi, which calls itself an Internet company and started with selling only online, will soon go aggressive in offline sales as well, according to Barra.

While Xiaomi already has a partnership with Airtel, and distributors Redington and TMS to sell products at offline stores as well, it is about to launch a direct to retail sales model to cut down on middle men in the offline retail chain.

“There are often three to four levels in offline distribution, each absorbing about two to three per cent margin. We will cut down on all these middle-men and have the distributor sell directly to a shop. Although this model is not as efficient as the online sales model, it is still the most efficient compared to existing offline models,” Barra said.

Xiaomi has been testing this model in south India for the past five to six months, and Barra said it will now extend the model to other parts.

Currently, less than 10 per cent of sales in India come from offline, while in China it’s about 30 per cent. Barra said the company expects a similar revenue split between online and offline, in India.

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