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October 2017
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Xiaomi – The next Asian tech giant in smartphones?

What is Xiaomi?

With the year coming to an end, the Chinese technology company based in Beijing, Xiaomi (translating to “little rice”) has made impressive recent progress in spreading their network to other countries in Southeast Asia. The four-year old company has catapulted into the lead of smartphone sales in China, and ranks third internationally, after the Korean tech giant Samsung, and from the U.S., Apple (Gibbs, 2014). Next to smartphones, they also produce a tablet, media box, smart TV, and accessories. Xiaomi currently has over 70 million smartphone users in China, and with the introduction of its product in new markets like India, with the Mi5 smartphone. They also confirmed plans to expand to Brazil, Russia, Turkey, and Mexico. Currently, they have already opened markets in India, Singapore, and a move towards countries like Indonesia, the Philippines, Malaysia, and Taiwan (Yuan, 2014).

 

Can Xiaomi be an international successful?

Imperative to understanding if Xiaomi will be as successful overseas as they were in their local market, China, a few things must be identified. Xiaomi essentially manufactures high quality hardware products with their own ROM skin version of the Android operating system. Their business strategy is based on being able to adapt to the unstable market, where competitors rise and fall like empires – Nokia recently having been bumped out of the market as a forefront competitor. Other companies like LG, Samsung, and Sony have had trouble expanding as quickly as Xiaomi has. The basis of his company, Lei Jun – CEO and founder of Xiaomi says is, “making the product that makes users scream” in the International Business Times. That being said, for the company, it’s not solely about profit; most of the revenue from the smartphone products is made from software use and purchases. Instead, they focus on what they create and offering it when they can. Currently, to get your hands on Xiaomi’s products, you have to order one while you can, as soon as a new batch is offered online. This limited supply keeps demand roaring while they expand operations.

Something to look out for is the success of the company in international markets, but especially what their success would look like in a highly competitive market with many other flagship companies like the United States or in countries in Europe. As it currently stands, Apple has fewer sales than Xiaomi in China in the third quarter, offering hope for them in other Asian markets. Research from Baidu, the largest search engine in China, showed that the success the company has had hasn’t been at the cost of other Chinese technology companies, but also Korean and Western companies – LG, Sony, Samsung, and Apple, such a trend in the new markets could be a helpful predictor for what’s to come. Internationally, Xiaomi is still a young competitor with 6% of global market shares – led by Samsung’s 25% and Apple’s 11% (Gibbs, 2014).

 

Are we ready for it?

When asking some iPhone users if they would be interested in buying a smartphone from Xiaomi, in general, they noted that they liked it, but it’s just not the same. One thing that Xiaomi may not be able to deliver is the overall quality product that the iPhone offers. One of my friends who moved on from his recently cracked Samsung Galaxy S4 noted that the iPhone 6+ was different, and in a way better than his old phone, and explained that the camera, “although the iPhone has fewer megapixels, for instance, than some other smartphones, it still often has a better overall image capture ability than a Samsung phone or a Sony phone”. The hardware in itself won’t deliver a flagship phone, but Xiaomi will soon show if it can barely survive or potentially thrive in international markets. Perhaps the Chinese company is still a bit young to challenge Apple and Samsung’s global markets, but Lei Jun emphasized his goal of becoming a global company. Xiaomi has tried to capture some of the Western design in their product to appeal to those markets with its translucent operating system MIUI – something comparable to the new Apple iOS 8. However, one of the aspects that set Xiaomi apart from other forefront companies in the smartphone market is its ecosystem of users. Many of the users are fans of the company and its product, as they share a love of technology – offering fans a forum to participate in weekly software updates and tweaks. Fans are allowed to participate in the code updates for the software and operating system to add in what they feel is important. Additionally, the company spends around 1% of their budget on advertising, and focus on spreading the word of their presence on social media.

 

What’s to come?

Its hard to say where Xiaomi will be in 5 years time, let alone 10 years time if they hold on to their ecosystem for that long, but it’s clear that we will see a shift towards app delivery and performance; a focus on hardware and software that can be offered to low-end users with a lower budget. Furthermore, flagship smartphones like the Mi5 will have to show their worth against some of the higher quality phones from Apple and Samsung in the international markets. Xiaomi’s strong ties to research & development will prove helpful in the next few years. With Samsung’s 29% control over India’s market, the next few months will pave the way for India’s future in smartphone products (Dutta, 2014). The developing markets in Asia are open to quick growth and could help Xiaomi to rocket closer towards Apple and Samsung.

The international market will challenge and test Xiaomi, and eventually tell us if they are ready for new markets, and if we can buy them and slip them into our pockets. For now, that’s a somewhat distant future, as there are limited sales and only in Asian markets, but time will tell what the future holds up and if the trust and sales build for the young Chinese company.

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