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[Xiaomi] Forbes: Xiaomi Is Once Again Among The World's Biggest Smartphone Brands

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16:07, Aug-11-2017 | From PC
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Hello MIUIers

Chinese smartphone maker Xiaomi is seeing renewed growth, after suffering bruising setbacks at the hands of local competitors over the past two years. But sustaining this momentum comes at a high cost.

In the second quarter of 2017, Xiaomi re-entered the ranks of the world’s top five smartphone brands by shipment, according to latest data from industry consultancies Canalys, IDC and Strategy Analytics.

The company shipped 21.2 million units worldwide, representing a 59% increase from last year, according to IDC.

"This achievement signifies a major inflection point in our growth — after two years of internal recalibration, Xiaomi is once again embarking on a rapid growth trajectory,” the company’s billionaire founder Lei Jun wrote in an internal letter announcing Xiaomi’s latest quarterly results back in July.

The turnaround, as Lei points out, is truly impressive. Xiaomi, a pioneer of the online flash sales model, once saw its smartphone shipments dip as low as 40%year over year as other Chinese brands emulated its strategy. Additionally, consumers increasingly want to try out devices before making a purchase – a shift particularly benefiting OPPO and Vivo, who sell their smartphones primarily through hundreds of thousands of brick-and-mortar distributors.

Xiaomi-1-1200x1601 (1).jpg


To recoup its losses and catch up with the competition, Xiaomi has taken a series of strategic steps. The company beefed up its supply chain to produce more devices, while focusing on advanced technologies – including its self-developed Pinecone chip and bezel less smartphones – to shed its image as a low-end manufacturer. Also contributing to sales growth is an increase in brand recognition across India. Xiaomi is now India’s No.2 smartphone brand with a 15.5% of market share, second only to Samsung’s 24%, according to Counterpoint Research.

However, the most significant step Xiaomi took was rewriting its online business model.

To attract customers from all walks of life instead of just targeting digitally savvy users, Xiaomi will embrace brick-and-mortar retail, building 2,000 Mi Home outlets globally by 2019.

In China, which will account for half of those stores, the company wants to generate 70 billion yuan ($10 billion) in sales from these stores by 2021. This means each outlet will have annual sales of 70 million yuan ($10 million) – outstripping even the most seasoned retailers. An average store of Hong Kong-listed jewelry company Chow Tai Fuk, for example, had 20.9 million Hong Kong dollars ($2.7 million) in annual sales in its 2017 fiscal year.

“If Xiaomi just sells online, its reach would be limited because a lot of people don’t want to buy until they try the devices hands-on,” said Canalys analyst Jia Mo. “With physical stores, its reach and appeal are much broader.”

The initial figures are promising. According to Canalys, of the 8.9 million smartphones Xiaomi shipped in China in the first quarter, up to 34% came from the 100 or so retail stores it had then, and one store in Beijing already made more than 10 million yuan ($1.5 million) in monthly sales, according to Xiaomi President Lin Bin.

However, retail expansion is still quite a challenge for Xiaomi, as brick-and-mortar stores don't come cheap, particularly for a company still struggling with razor-thin margins.

Compared to the mom-and-pop shops that sell OPPO phones, Xiaomi’s stores have a more upmarket feel. The company is emulating Apple’s signature outlets by opening spacious showrooms full of long, wooden tables displaying its gadgets and smart devices. A typical Mi Home is around 200- 300 square meters, with several Xiaomi staff on hand to help customers.

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"Customers look at a Xiaomi Corp. Mi Robot Vacuum Cleaner operating inside one of the company's stores in Beijing"

In Beijing and Shanghai, such prime retail rent costs from $185 to $250 per square meter per month, according to real estate consultancy Knight Frank. This compares with $513 in Hong Kong and $202 in Taipei.
Xiaomi also faces surging labor costs. Unlike popular belief, labor costs in China are only 4% cheaper than in the United States if productivity is factored in, according to an Oxford Economics survey released last year.

This means that Xiaomi, despite raising $1 billion in syndicated loans earlier this month, probably needs to raise more funds to sustain the retail push, says Canalys’s Jia. The company's own margin has been hovering around lower single digits since a 2014 stock exchange filing showed it only had an operating margin of 1.8%, according to Forrester analyst Travis Wu.

“Xiaomi is right to go offline,” Wu said. “But the company needs to invest so much that it must be prepared to take on losses. Building physical stores represents a huge gamble.” Yet it is a gamble Xiaomi must make. For all its latest achievements, the company is nowhere near its ultimate goal – keeping customers wedded to its ecosystem of software and devices, where they make repeated purchases of Xiaomi-provided content from the company’s phones.
One reason is Chinese users are spending more and more time in Tencent’s all-inclusive instant-messaging app WeChat to play games, watch videos and read news, meaning they don’t need to visit Xiaomi’s services as often, analysts said.

“Through those retail stores, Xiaomi not only wants to sell more phones but more smart devices,” Canalys’s Jia said. “So the company can have more potential customers who might buy its services.”




Disclaimer: This is a reproduced article and the copyright rests with the original author. The views in this article are not from MIUI News Team, or MIUI Global Forum. If there is any disagreement, please contact the Forum Management Team to delete it.

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16:29, Aug-11-2017 | From PC
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Thanks for sharing the Great News.
Greetings from Mi Fan Club Bangladesh
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20:57, Aug-11-2017 | From PC
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Not bad... But if this company continues to follow its current policy of neglecting and not listening to its users this trend will go the other direction..

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21:10, Aug-11-2017 | Via mobile
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Thanks  for sharing awesome news 😍

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21:10, Aug-11-2017 | From PC
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wonderful information

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21:20, Aug-11-2017 | From PC
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Keep it up Xiaomi

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22:20, Aug-11-2017 | From PC
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Great news and thanks for sharing the information.
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00:05, Aug-12-2017 | From PC
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xiaomi is the best

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01:24, Aug-12-2017 | From PC
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Oneironaut

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Redmi 4 Prime
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01:25, Aug-12-2017 | From PC
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