Xiaomi rides popular wave

31 October 2014

BEIJING/MUMBAI: Xiaomi has risen to become China's leading smartphone brand and the world's number three in a mere five years and is looking to conclude a major loan arrangement to finance a push into new markets.

New figures from market researcher Strategy Analytics indicate that Xiaomi accounted for 5.6% of all smartphones shipped in the third quarter, up from 2.1% a year earlier.

The dizzying speed of change in the mobile market was further emphasised by a sharp fall in the share of market leader Samsung, from 35% to 24.7% over the same period.

"Xiaomi's next step is to target the international market in Asia and Europe," noted Neil Mawston, executive director, Strategy Analytics. And the Financial Times reported that Xiaomi was set to sign off on a $1bn loan to help it move into those markets it has earmarked, including Brazil, Mexico, Indonesia and Malaysia.

Xiaomi sells millions of smartphones in China through its extensive online and operator channels, a model it has adapted for other markets.

In India, for example, "its strategy challenged almost every set norm of the marketing rulebook" according to Grey India Planning director Ankit Singh, with a series of flash sales on ecommerce site Flipkart, some lasting less than three seconds.

In India, he noted, "online shopping is treated like discount shopping plus convenience" and launching a product online still involved a traditional process of raising awareness through to offering a discount to seal a sale.

Xiaomi's launch, however, had "short-circuited the whole model by cutting down all the intermediate steps and directly making sales". There had been no advertising, no chance to experience the product and no discounts or freebies.

From this, he drew several lessons, including the need to reconsider the role of traditional advertising. Xiaomi's success had come from investment in forging bonds with consumers through social media, with highly active user communities on Facebook for example.

He further remarked that products are now only launched once, as "brand values are shared and transferred instantly across the globe".

And, observing the fate of Nokia and Blackberry, he declared that "the brand has to prove its worth with every new product launch or with every technological innovation".

Data sourced from Strategy Analytics, Financial Times, Afaqs; additional content by Warc staff