Reasons Why Xiaomi Open Mi Online stores in the US without Selling Xiaomi Smartphones

by Frank Tu 1


Xiaomi’s online-stores in the US go online in the middle of Feb. 2015. Today, Hugo Barra (VP of Xiaomi) expressed that Xiaomi’s online-stores will go online in Europe market on MWC 2015 Conference, that is to say, Xiaomi’s online-stores in Europe will only sell some accessories like Xiaomi Band, Xiaomi headphones etc. rather than its major product- Xiaomi Smartphone.



Xiaomi, steps down from the peak gradually


Xiaomi, founded in 2010, began to sell smartphone in 2011, and took the most market share in China smartphone market Q2 of 2014, then became the top one in China smartphone market and ranked the 3rd globally in Q3 of 2014. All these halo makes Xiaomi be regarded as the most sparkling company in China.


However, in 2014, as Ren Zhengfei (CEO of Huawei) found that Xiaomi is unsurpassable regarding the Internet marketing, he asked to reform the strategy, that is, compress the low-end version smartphones and promote the high-end version smartphones, Huawei HONOR kept on to Xiaomi, HiSilicon focused on Research and Development, and in return it made a great progress – Kirin 920 SOC, which has surprising performance on processing, baseband technology, making a greater improvement on sales, profit and brand awareness etc. And at the same time, Huawei HONOR’s surging sales in Q4 of 2014 lay great pressure upon Xiaomi.


Even the price of Redmi and Redmi Note get a price cut of 100 RMB, Xiaomi sales shrinked in Q4 2014. This situation made them realize that Xiaomi could not keep the high speed as before, they began to set foot into international market, however with so many setbacks, like be fined in Taiwan due to the make-up for the sales, and banned in Indian market due to infringement of the Intellectual property of Ericsson etc.


The consequence is Xiaomi couldn’t reach its expected capital raising – 1.5 billion USD, even Xiaomi makes combination blows in Internet Business and cooperates with the US strategically, the final capital raising is only 1.1 billion USD. Later Xiaomi meets a wealthy real estate businessman in China Pan Shiyi (President of SOHO China) immediately, which made us recoginize that the reason may related to the shortage in capital raising.


The importance of setting online-stores in the US and Europe


Chinese has been longing to see its brand go onto the global stage, indeed, brands sold in the  US and Europe do have the advantage to improve the fame rapidly internationally. Huawei has been insisting on launching smartphones to Europe market, and emphasizing the price in Europe priced more than that in China. It helps Huawei win the praise from Chinese countrymen, till the end of last year, Huawei gain 3% market share in Germany and Spain according to its own words, and netpals in China also feel proud of it, they think Huawei set higher price in international market than that in China, the strategy will help Huawei win the brand awareness. Till Q2 of 2014, international sales took 42.3% of Huawei’s whole sales results (data from ISUPPLI), the global sales surged more than 40%, which is the best result since 2011.


Obviously, Xiaomi wants to sell their smartphones to the US and Europe, winning the brand awareness, however, Xiaomi has less smartphone patents, on the other hand, markets in the US and Europe have been known for the strict policy for intellectual property. HTC has ever taken the most market share in the US market, but tumbled down after Apple sued its infringement of intellectual property.


Xiaomi chose to enter Indian market, where the patent policies are not so strict as that in the US and Europe, however, being sued by Ericsson due to the infringement of intellectual property. Under such circumstances, Xiaomi launches the sales of smartphone accessories to the US and Europe market is the wise choice. Xiaomi is so good at Internet marketing, and it can take advantage of its Internet marketing for its online-stores in the US and Europe, winning brand awareness, and laying foundations for its smartphone entering the US and Europe market.


Xiaomi enters the US market by opening online-stores to expand its influence is also regarded as the base for the be-listed project.


At this moment, choosing to open online-stores in the US and Europe is a good choice, which can help itself to gain more benefits. The interesting thing is that, Huawei, Xiaomi’s old rival, did not  do well in the US smartphone market, and Huawei announced that it will launch the wearable devices to the US market this year. Does that mean the two will compete from China to the US?