China's Xiaomi to assemble phones in Indonesia

China's Xiaomi to assemble phones in Indonesia

Chinese smartphone maker Xiaomi plans to assemble its products in Indonesia this year in a bid to boost the percentage of local content ahead of the government's "made in Indonesia" plan that will impose a mandatory 40-per cent local content requirement for 4G handsets.

"We are looking at options to enable us undertake local assembly in Indonesia. Our expectation is that we will be able to set that up during the course of 2015," Xiaomi general manager for Southeast Asia, Steve Vickers, said on Friday.

Xiaomi would use contract manufacturers in Indonesia in the same way the phone maker had done in China and Brazil, he told reporters, while declining to reveal the details of potential manufacturing partners.

Among local electronics component manufacturers currently operating in the country are Batam-based PT Sat Nusa Persada and Serang-based PT Tridharma Kencana.

Vickers said his company, however, had yet to sign any contract with local assemblers, saying that the completion of the planned deal would depend on stipulations in the regulation, which are currently still under discussion.

The Communications and Information Ministry has said it aims to issue a regulation in the middle of this year requiring a minimum of 40 per cent local content in all 4G handsets on sale in the country by 2017.

Details on the calculation of local content are still being discussed by the ministry, the Industry Ministry and the Trade Ministry.

Vickers said most of Xiaomi's content was currently sourced from China and that it had very little Indonesian content.

Xiaomi, which has officially been present in Indonesia since August last year, had a revolutionary sales strategy that challenged traditional sales strategies of smartphone giants like Apple and Samsung, PT Erajaya Swasembada marketing and communications director Djatmiko Wardoyo said recently.

Xiaomi relies heavily on social media to promote its products, and previously sold them exclusively through a partnership with local e-commerce giant Lazada.

The Beijing-based company, however, in began a partnership in November with mobile phone retailers OkeShop and Erafone - operated by Erajaya - to help with sales distribution across the archipelago.

Vickers said that in Indonesia alone, Xiaomi sold around 250,000 handsets in the fourth quarter of last year, both through its online and offline channels. While the company had not set any specific target for its sales this year, Xiaomi aimed at significantly increasing its sales volume in Indonesia, which was currently its third-largest market after China and India, he said.

The company recently disclosed that it booked US$335 million (S$458 million) in total sales during its 12-hour global flash sale, dubbed the Mi Fan Festival, on April 8. In Indonesia alone, the firm sold 40,000 units of its new device the Redmi 2 (including accessories) during the flash sale.

To tap deeper into the country's growing smartphone market, Xiaomi announced on Friday a partnership with cellular operator PT XL Axiata to offer bundle deals with the Redmi 2, taking advantage of XL's strong data subscriber-base. XL currently has a total of 59.6 million subscribers, of whom 30 million are data users and 16.1 million are smartphone users.

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