China-based smartphone maker Xiaomi, which is already investing to boost its retail operations in the company’s home market, is now planning to invest additional $725 million towards retail growth in China in order to counter the growth of Huawei.
As per the reports, the additional $725 million will be spent by the company on reward programs for sales employees and retail partners as well as expanding Xiaomi’s distribution channels.
In China, Xiaomi currently ranks fourth in terms of smartphone sales, trailing behind Huawei, Samsung, and Apple. As per the data, Xiaomi holds around 12 percent of the Chinese smartphone market, compared to 34 percent captured by Huawei.
The sales of Xiaomi declined by a small percentage in Q1 2019, from 27.8 million smartphones sold in Q1 2018 to 27.5 million sold in Q1 2019, securing 8 percent of the Chinese market. On the other hand, Huawei rose 41 percent and held 19 percent of the Chinese smartphone market in the same quarter.
Going forward, Huawei is looking to increase its hold on the Chinese smartphone market from 34 percent to 50 percent to make up the profit difference after the company got banned from doing business with US-based companies and technologies.
Xiaomi was so focused on its online sales strategy in the Chinese market that the company refrained from growing its offline sales channel. Meanwhile, it’s competitors captured the offline market, which in turn affected Xiaomi’s overall growth in its home market.
However, learning from its mistakes, Xiaomi started investing heavily in the Indian market to boost its offline presence. Now, Xiaomi is the dominating player in India’s smartphone market, followed by Samsung.
The additional investment for Xiaomi in order to boost its Chinese business comes at a time when Huawei is going through a rough patch. The Trump administration has banned Huawei and some 60 subsidiaries from selling and doing business with US entities and companies. Earlier this week, Huawei said that it could lose around $30 billion over the next two years because of the Trump Ban.
(Via)
