Xiaomi’s downward spiral continues, loses spot as the top smartphone brand in India after five years

The Chinese smartphone industry had been on a downward trajectory for most of 2022. The biggest example from the struggling industry has to be that of Xiaomi. Even in India, a market where the Chinese smartphone brand has done exceptionally well, things aren’t as rosy as they were a few years ago.

The Chinese smartphone giant was dethroned in India for the first time in five years by Samsung Electronics from the top spot of the Indian smartphone market. This comes at a time when online sales are at an all-time low and Xiaomi is facing increasing regulatory scrutiny.

According to a survey by Canalys that was released on Thursday, a 40 per cent decline in shipments caused Xiaomi, which had held the top spot in the market for 20 consecutive quarters, to drop to third place. With 5.5 million handsets sold, Xiaomi had a market share of 17 per cent, compared to Samsung’s 21 per cent and Chinese rival Vivo’s 20 per cent.

For the first time since the third quarter of 2017, Samsung led the Indian market with 6.7 million devices delivered for the period. Nevertheless, its shipping figures were down 21 per cent from the corresponding time in 2021, as India’s smartphone industry struggled with its first fourth-quarter dip, falling 27 per cent to 32.4 million devices.

“Xiaomi used the e-commerce channel to try to get rid of its inventory of outdated models. However, due to subpar online holiday sales, Xiaomi and Realme saw massive stockpiling of their products in 2022,” said Canalys analyst, Sanyam Chaurasia

The most severe year-over-year decline was experienced by Realme, which Oppo incubated before breaking out into its own firm. Realme’s sales fell by 65 per cent to 2.7 million devices. It dropped to fifth place as Oppo, which increased 9 per cent to 5.4 million units, overtook it.

The market downturn of Xiaomi coincides with increased government oversight of Chinese technology companies and internal business restructuring. Raghu Reddy, the chief business officer of Xiaomi India, left the company last month in order to “pursue different growth opportunities externally.”

His exit came two months after the company said a local court decision to freeze US$676 million of its funds over alleged illegal remittances – a claim the company has repeatedly disputed – would “effectively halt” its operations in the country. 

The Indian government has increased pressure on Chinese tech businesses through app bans and investigations into firms like Xiaomi, Vivo, and Huawei Technologies Co. after the border incident between Chinese and Indian soldiers in 2020.

Indian law enforcement raided the headquarters of Xiaomi and Vivo earlier this year on suspicions of tax evasion and money laundering. Xiaomi has shut down its financial services division in India and removed its mobile loan and payment applications from regional app marketplaces.

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