Xiaomi: Because you don’t need the US market to be successful

xiaomi

Q2 2014 results from Strategy Analytics say that Chinese brand, Xiaomi, is now the 5th largest smartphone maker globally. 5th. And they did it without investing one cent in the US market. Since 2011, I wondered what Nokia and BlackBerry were on about with respect to their crave in recent times to win the US market. See my articles, Does RIM/BlackBerry Need To Win The American Market?, What Shall It Profit a Brand to Gain the US and Lose the World? and One business lesson from the smartphone bloodbath.

Both of them clearly had their strengths elsewhere – South America, Africa, Middle Easta dn Asia. Yet, they invested sweat and blood in appeasing the American smartphone market. And both failed at it. Till today, Nokia’s recent successes have been elsewhere but the US market, though a huge chunk of their energy has been channelled into digging in there. Just imagine if they had spent those resources in the areas of their strength instead. Same goes for BlackBerry.

When low on resources or in a weak position, the ideal move is to focus on your strengths and your easy markets to build momentum. Then, when much stronger, take on the tougher places. This is exactly what Xiaomi has done. By the time the Chinese brand decides to tackle Western markets, including the US, it would be from a new position of strength. Yes; the huge Chinese market was/is a leverage for them. Still, they followed the principle: use your areas of strength to build momentum first. That’s how to win. Imagine if Xiaomi had spent resources on getting a footing in the US first. We wouldn’t be having this discussion today.

I remember someone responded to me last year with the following statement, “Emerging markets will not save anybody. Let us stop deluding ourselves.” Tell that to Xiaomi and a host of others who are blossoming in emerging markets alone. China is a country of hugely poor people. Too often, we underestimate the power at the base of the pyramid. Eventually, emerging markets will save the world. Quote me.

The number 5 smartphone maker by shipments. And not a dollar invested in the US or other Western market. Amazing. Be sure to do one thing: keep your eyes on Xiaomi for when they will make a move for a global reach. In the meantime, when do we start getting Xiaomi smartphones here in Nigeria? Huawei is here. Lenovo is here. [In MFM prayer tone] What are you still waiting for?!

FYI: the top 5 smartphone makers globally currently are: 1) Samsung; 2) Apple; 3) Huawei; 4) Lenovo; 5) Xiaomi. See the trend? Of the top 5, three are Chinese. China Rising.

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14 comments

  1. To me i think the reason why the US market is so important is the fact that the US market is the biggest market in spending power per capita as such any company that really wants to boost it’s profits needs to invest in this market. And as we know all companies were set up to make money (profits). Apple doesnt have the biggest smartphone market share but that doesn’t stop it from making the biggest profits in the market.

    1% of 1 billion is better than 50% of a 100 million.

    1. 1% of 1 billion (10 million) is smaller than 50% of 100 million (50 million). besides Apple has the biggest share of the juiciest portion (high end/premium) of US & EU smartphone markets. since Xiaomi got Hugo Barra to leave Google and go to China I knew their numbers were gonna explode. also they have this viral social marketing technique that keeps their customers in their grasp, it’s similar to how Apple manages to keep iPhone users

  2. Martinkem Hit My Head With A Nail There…

    It’s Not How Many You Have Sold.. It’s How Much Your Total Profit Is..That Your Investors Care About.

    I Studied Hard For My Cambridge Exams..Big Deal.

    (How Well) Did You Pass?. The Only Deal!

  3. @3rd world Techie,thanks ..i used the wrong example (i blame it on my math tutors) it should have been 10% of 1 billion compared to 50% of 100 million.

    I think Apple’s strategy is the better model for any company that is worried about profits. Their emphasis on premium helps build brand loyalty. Even their ads that they points to that (i just watched their latest ads that focused on what one could do with the iphone via third party accessories, compared to Samsung’s approach of bashing the iphone).
    I don’t really fancy the new business model adopted by these new chinese upstarts to create a sense of customer demand by limiting the amount of inventory available to the public. i have tried to order Xiaomi’s redmi, Galaxy note-like device all to no avail (shipping to the UK), it’s always out of stock on their website (Signapore english version). And that’s the same thing being adopted by OnePlus to generate a fake high demand.

    At the end of the day, the USA market is important but like Mister mobility said no company should sacrifice their bread and butter (am looking at you, Nokia) to win the US market particularly when they are doing just fine without it. I still think Nokia should have not gone with Wndows Phone (i bought a Lumia 1020 two weeks ago, and i haven’t taken it out of the house more than 3 times, i always end up leaving it in my drawer. It’s an amazing device, good OS but it’s no Android).

  4. My friend, you can’t make giant profit in the phone industry without receiving blessings from the European and US markets because these people are 10 times richer than the rest of the world. People in these locations can afford to buy what we see as very expensive phones by expending what I call chicken change.In the US and Europe, people tend to buy phones by purpose and functions and not by design and beauty alone. This is because they are more informed and enlightened about the tech. Specifications of any phone and reviews/comments made by people about any new phones before they actually go to purchase them.This reduces the risk of buying what one will later regret and build cudtomer’s confidence in buying smart phones.

    Lastly, you praised Xiaomi for taking the 5th position in the smartphone industry without investing in US and Europe forgetting that Huawei is occupying the 3rd position due to its huge investment in US and Europe and its tireless struggle to build confidence in the hearts of customers from these regions and not from Africa,Asia or Middle east. The result is Huawei taking the 3rd and not the 5th position despite the fact that both of them produce premium and high end phones.

  5. Yeah, I think Mr. Mo is correct here. When Nokia jettisoned the rest of the world in pursuit of the US market, their Windows Phone market share remained very insignificant, it was when they started shipping those Windows Phone devices abandoned by the US market they they started making dinner sales even in Europe. Even Microsoft were guilty of this too because they also concentrated their marketing efforts in their home ground until it became obvious to them after some 3 years of Windows Phone launch that the American market just don’t care about their Apple-like control on their new platform before they started spreading their marketing effort abroad.

    The way Nokia abandoned Symbian and the rest of the world for Windows Phone and American market made it appear as though they weren’t making profits without America.

  6. When is Xiaomi coming to Africa and Nigeria? They have really cool range of products that will be big hits in Africa.

  7. I guess very wrong to assume the American and European consumers so rich to buy high end phones like the iphone. Its the contract post paid system with the telecomms carriers that gives the likes of Apple guaranteed market hence they end up changing phones every other 18 to 24 months when their phone contracts are due for renewal. Emerging markets where consumers buy phones cash down is the real deal. Were the Nigerian market to be developed, I’m sure most of us will afford iphones on contract and pay over 12 to 24 months and upgrade every now and then.

    1. actually tweeted at Hugo Barra early this year and one of their reps replied that they plan to enter select European , African & Middle Eastern markets in 2015

  8. Profit margin, social influence, and so on are the reasons the U.S market is still the Holy Grail. Xiaomi sells cheap phones and is run in a country that has almost ¼ of the world’s population yet their profit margins from phones is not even close to that of manufacturers in a country with a fifth of the population in China. Nokia was also selling bucket loads of cheap feature phones, but it went under because the profit margin was so small. If a firm like apple does not make 40 billion dollars as profit, investors would consider that financial year a failure. Tells you all you need to know

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