Case Study - Xiaomi
Case Study - Xiaomi
Case Study - Xiaomi
Unsatisfactory sales
In 2019, Xiaomi surpassed all giants and stood
first in India, owing to multiple rounds of
shopping festivals by the online platforms
{source:IDC}
According to the case, in 2015, Huawei surpasses
Xiaomi accounting for 41 per cent of the total
Chinese overseas smart phones sales. Same trend
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is seen in 2019.
Trust issues
Violation of Taiwan Trade Fair Act during December 2013 flash sales for irregularities in
Xiaomi's online sales of the phone as was fined heavily. This led to loss of brand image in
the country.
Patent Deficiency [1]
Ericsson sued Xiaomi in India stating that it hadn’t licensed inventions by Ericsson that
enable wireless devices to connect to networks resulting in temporary ban of Xiaomi
sales
Cool pad subsidiary, Yulong Computer Telecommunication Scientific (Shenzhen) Co has
filed a lawsuit against Xiaomi for patent infringement demanding it immediately stop
production and sale of some Smartphone models, including the flagship Mi Mix 2
Blue Spike LLC, accused patent infringement on the grounds that Xiaomi Mi5 designs,
develops or manufactures Address Space Layout Randomization software, systems
which they import and offer service of it into the U.S. market.
TIMELINE OF INTERNATIONALIZATION
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SNO. COUNTRY YEAR HIGHLIGHTS
1 Hongkong [2] 2013 E-commerce -Hong Kong Telecommunications Limited ; MIUI
forum
2 Taiwan 2013 E-commerce - FarEasTone Telecommunications ; warehouse in
Taiwan ; MIUI forum
SOUTH EAST ASIA
3 Singapore, 2014 Singapore - The Xiaomi Mi 3 flash sale sold out within 2 minutes
Malaysia, India, Malaysia -
Indonesia, India - Two of India's major e-commerce sites and through offline
Philippines retailers for the first time. After-sales services was outsourced to
Gadget Wood eServices Pvt. Ltd, “Xiaomi fan festivals
Indonesia- Lazada Groups built a giant warehouse for Xiaomi, 22
percent market share in Indonesia while Samsung holds 25
percent market share.
Philippines – Local distributors, Mi Stores for boosting sales in
late 2018
4 Australia[3] 2014 A Store in Australia began selling Xiaomi mobile phones online
through its website XiaomiStore.com.au. Xiaomi soon "requested"
that the store be shut down within few months as it was an
unrelated business
5 Africa 2015 Xiaomi reached an agreement with Mobile in Africa (MIA) Group
to provide selling, marketing, and after-sale service in 50 countries
in sub-Saharan and released Redmi 2 and Xiaomi Mi 4 smart
phones, available in South Africa, Kenya, and Nigeria
6 Brazil 2015 They locally assembled a Smartphone outside of China for first
time and Launched Redmi 2 but shortly after starting operations in
Brazil the company left the country in the second half of 2016. In
2019, Xiaomi Brazil’s Twitter account tweeted that they would
return to Brazil again [4]
7 Bangladesh 2016 Xiaomi entered Bangladesh via Solar Electro Bangladesh
Limited[5]
8 Pakistan 2017 On August, opened its first flagship Mi Store in Faisalabad[6]
9 European Union 2017 Xiaomi smart phones became officially available in the European
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[7] Union through their partnership with ABC Data
EU's first Mi Store has been opened in Athens, Greece
Xiaomi started operating in Spain, making available the Mi A1 and
Mi Mix 2 smart phones
Xiaomi opens, in Paris, its first French store
Xiaomi opens, in Arese Mall (Milan), its first Italian Mi Store.
10 US [8] 2018 Xiaomi only opened its smart hardware—including the power
bank, Mi band, and in-ear headphones—for sale in the United
States through Amazon
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SWOT ANALYSIS
OPPOURTUNITIES
Entry into more international markets Escalating tariffs and a looming global trade war
Low-end phones market has increasing demand etc
Entry of new players Eg:- Maxx, Gionee, Intex,
Brick and mortar stores
players Eg:- Samsung, Nokia, Karbonn
High competition from local & international
THREATS
PESTEL ANALYSIS
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PORTER FIVE FORCES ANALYSIS
STRONG
WEAK FORCE
The case study revolves around the challenges faced by Xiaomi during the process of its
internationalisation. As seen in the beginning the company was facing trust issues which led to
low brand image. Unsatisfactory sales with reducing market share in the global Smartphone
market. Based on the analysis of the company, both external and internal environment analysis,
we got a picture about the problems the company is facing. Here are few recommendations and
suggestions for the Xiaomi to over the road blocks while expanding globally:
One major issue identified in the case is thin patent portfolio. Patents are territorial
rights, so as Xiaomi moves into different regions. Xiaomi should find ways to get patents
to stay away from lawsuits. Patent trolls tend to reduce the brand image and create an
impact on brand loyalty. As on march 2020, Xiaomi now has more than
28,000 patents in its portfolio globally (14,000+ unique patents per family) with more
than 60% Chinese patents [12]. Biggest patent deal was with Microsoft to remove some
obstacles from its US invasion plan in 2017.
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Lack of Offline options: Xiaomi boost the sales directly through its online store, allowing
it to bypass the costs of operating brick-and-mortar locations. Not all countries are fond
of online shopping. Increasing the Mi retail outlets is required when the company try to
expand globally. For example, In India, Xiaomi partnered with the largest e-commerce
for its sales but however they had increased the number of retail outlets due to
stagnation in their online sales. In 2018, they planned to have 5,000 Mi outlets. A
thorough market research on the buying behaviour of the customers before entering
the company is suggested.
Home and other electronic products as a pavement to increase brand image: Although
Smartphone is the major source of revenue generation, Other Mi Home products like Mi
TVs and electronic gadgets like Mi smart bands can help company improve its brand
image. With growing technology, more people prefer tech gadgets Xiaomi’s ecosystem
of products can deliver a great impact in improving their lifestyle and social status. This
might also help the company to come out the common notion “Made in China”
Need for Innovation: Though threat from substitute is weak for Xiaomi because of its
low price, the problem still exists with High ranked competitors like Apple, Samsung. A
recent example of accusation for copying Apple includes Xiaomi’s Mi 9 smartphones
having resemblance to the iPhone X when it was released last year. They also unveiled
its Air Dots product that looked like an Air Pods of Apple. [14] .Company should strive for
creating unique product which should have different characteristic and position in the
minds of the customers.
Building strong finance structure: For any company to work o its expansion and
innovation, it requires sound finance for it to carry out the operations. Xiaomi’s first
round of funding, Series A, was concluded on December 1, 2010, and amounted to $41
million with in- vestments made by QiMing Venture Partners and Morningside Group.
Xiaomi debut to IPO in Hongkong and India failed and fell up to 30%. Company should
identify ways to raise its fund because it is crucial for them to invest more in R&D.
MIUI: MIUI is the one important strong feature for the company. Their characteristic
feature which attracts customers is Second Space, creation of different profiles for
different pass codes or fingerprints, scrolling screenshot, app lock, and Themes and
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much more. Though, MIUI offers more unique features and customizations than Android
One phones, clutter and layers with MIUI will eventually make the phone bloated and
heavy, affecting day-to-day performance. Company should look into these problems and
come up with solutions.
CONCLUSION
Although Xiaomi has a very unique and novel business model and has done
considerably well in such a short period of time but in spite of that the company is and
will face some significant challenges which they need to overcome so that this burst
prevails in long run.
Concluding the case study on Lei’s disappointment during his annual meeting on
pursuing his global expansion dream Lei reached out to co-founder Wanqiang Li, asking
for suggestions. He suggested two option Seek offline partners and Development of
strong MIUI platform to reduce patent disputes. Based on the above analysis both the
options has to be considered for internationalization because expanding globally should
be dealt holistically considering into various options available.
REFERNCES
1. Xiaomi May Have A Major Patent Problem – Forbes ;
https://www.forbes.com/sites/parmyolson/2015/01/29/xiaomi-patent-problem/#4f5e21023ace
2. Xiaomi extends its footprint to Taiwan and Hong Kong;
http://www.china.org.cn/business/2013-04/10/content_28498543.htm
3. Xiaomi Global shuts down Australian online stores ;
https://www.pcworld.idg.com.au/article/552482/exclusive_xiaomi_global_shuts_down_australi
an_online_stores/
4. Xiaomi on its way back to Brazil, reveals an official tweet ;
https://www.gizmochina.com/2019/03/29/xiaomi-on-its-way-back-to-brazil-reveals-an-official-
tweet/
5. China's Xiaomi smart phones launched in Bangladesh;
http://www.chinadaily.com.cn/business/2016-08/19/content_26530468.htm
6. Xiaomi enter Pakistan ; https://propakistani.pk/2017/08/31/breaking-xiaomi-opening-first-
physical-store-pakistan-today/
7. Xiaomi ; https://en.wikipedia.org/wiki/Xiaomi
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8. Xiaomi is bringing its smart home devices to the US — but still no phones yet;
https://techcrunch.com/2018/05/10/xiaomi-is-bringing-its-smart-home-devices-to-the-us-but-
still-no-phones-yet/
9. Panigrahi, Ashok. (2019). A Case Study on Marketing Strategy of Xiaomi. 4. 46-52.
10.5281/zenodo.3466131.
10. Xiaomi CSR: lack of information and CSR activities ; https://research-
methodology.net/xiaomi-csr-lack-of-information-and-csr-activities/
11. How and why Ericsson banned sale of Xiaomi phones in India ;
https://www.techinasia.com/ericsson-banned-xiaomi-selling-phones-india
12. Xiaomi’s Global Expansion Plan is Steered by Patents – A Patent Portfolio Analysis ;
https://www.greyb.com/xiaomi-patents/
13. Xiaomi to expand India stores 10-fold as online sales stagnate ;
https://asia.nikkei.com/Business/Companies/Xiaomi-to-expand-India-stores-10-fold-as-online-
sales-stagnate
14. Xiaomi has returned to its playbook of copying Apple ;
https://bgr.com/2019/07/02/xiaomi-vs-apple-mimoji-looks-like-memoji/
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