Xiaomi prefers WOM to advertising

10 October 2014

BEIJING: Xiaomi, the fastest growing smartphone vendor in China, believes investment in quality products and innovation is a more effective driver of sales growth than advertising, the company's president has said.

In an interview with the Nikkei Asian Review, Lin Bin dismissed traditional marketing methods as a thing of the past in the internet age and asserted that word-of-mouth marketing is the best – as long as it is underpinned by quality products.

"We think we should invest in creating innovations and research and development to improve our products further, rather than spending that kind of money on advertising," he said.

"If your products are good, customers will naturally tell their friends and family about them, effectively helping us with word-of-mouth advertising. But your products have to be good for this to work.

"At Xiaomi, we put our full energy into improving our products, and count on our customers to spread [word of] their satisfaction through Weibo and other social networking platforms."

The company, which sells most of its products online and recently overtook Samsung to become the largest smartphone vendor in China, sold 26.11m smartphones in the first half of 2014.

But Lin does not expect sales to stop there. He said the company's monthly shipments have been close to 6m recently, leading him to forecast that Xiaomi will sell "at least" 60m units in 2014 at that rate.

With demand so strong, he said sales may jump 50-100% next year which would take its shipments beyond 100m in 2015.

The vast majority of its sales are currently in China, but Lin confirmed plans to expand into foreign markets where "populations are large, online sales are still in the development stage and the telecommunications carriers are not too powerful".

Xiaomi has already established a presence in India and Indonesia and the next markets will be Brazil and Russia. "But our overseas business has only just begun," Lin warned global competitors.

Data sourced from Nikkei Asian Review; additional content by Warc staff