Xiaomi – The Apple of China in Trouble after other Chinese Phone Brands Eat their Market Share

by Karthik Iyer 1

The Chinese Smartphone manufacturer Xiaomi has grown exponentially over the past couple of years. By the end of 2014, the company was officially crowned as the world’s most valuable technology startup. Well, for a company established in 2010, having a private valuation of more than $46 billion is not a joke. The company is known for it’s cheap/affordable range of smartphones which surprisingly have amazing build quality too. It got a tremendous response in the Indian market as well.

But it is reported that the company is not doing very good lately, in terms of sales. According to a report, the company sales figures dropped by 38 percent in the second quarter of 2016 in China. Although the company is known to be doing well with their smartphones, the sales figures were never so impressive. In the year 2015, Xiaomi set out an ambitious target of 100 million smartphones. But the situation was not really in the company’s favour. It ended up selling only 70 million.

With that, it pulled in 78 billion yuan for the year, which was only up by 5 percent on 74.3 billion yuan in 2014. This was well short of the 100 billion target figure. This was not bad by any means but still far from good against the competition. Also note that the company also sells products other than smartphones like water purifiers, hoverboards, etc. But smartphones still makes most of the share for the company with only up to 5 percent from other products.

Now let’s talk about the current scenario. To keep it short, things are not looking good for the company as of now. Xiaomi sold an estimated 10.5 million smartphones in China in Q2 of 2016. This is down from the 17.1 million they sold last year, which is a drop of about 38.4 percent. The reason for the same appears to be a fierce competition from the Chinese rivals like Huawei, Oppo and Vivo, etc. Looking at the sales figures from these manufacturers, they have shown an immense growth in terms of market share.

market share Q2 2016

Huawei which is doing good with their existing line of smartphones saw a 15.2 percent year-over-year growth. But the winner here is definitely the OPPO and Vivo with a year-over-year increase of about 124.1 percent and 74.7 percent respectively. This clearly shows that the company is lagging way behind the others in the race for the top position. Things were going well with the launch of the Mi4 and then they launched the Mi4i in India and launched the Mi4c in China. After that, the focus shifted to the budget smartphones. Things again started falling apart until they launched the Mi 5, with which things started to become comparatively stable.

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Okay, so enough of all the numbers right? Let’s see where they have gone wrong. Numerous reports are pointing to the failure of marketing as the cause. We all know that the company has spent very little as compared to others on marketing. They believed the user’s hype and word of mouth certainly did the job for them. This might have worked for them initially, but as the company matured as a brand, this is no longer of any use here. Talking about the competitors here, they are spending heavily on marketing and building a brand reputation.

Talking about the market presence here, the company tagline “Devices from the Future” was mocked by many, a couple of months back. We discovered that the company took it to a whole new level and started selling devices made in future. It all began when the company brought back their Mi 5 device from a future manufacturing date. Soon after that, Xiaomi became the centre of attention for all jokes regarding the time travel. Is this the type of media presence they are looking at? Definitely not.

With that being said, the company should start focusing more on the marketing and get their strategies right and then maybe we can see them touching the heights, which they set out to do initially. But as of now, the Apple of China is in some serious trouble.

Karthik Iyer

Karthik is a Computer Science Graduate and a Tech Aficionado who has always found himself fascinated or playing around with all the latest and the best from the world of smartphones and beyond. When he is not working on any smartphone or covering the latest scoop, you can often find playing his favorite PS4 titles.

  • Nebu Cherian

    It’s not just marketing alone has caused the problem…I guess some of their devices like mi4i and also their strategy to come up with different devices for different market, also the heating issues with certain devices has really got them to this position. For example mi4c was way better than mi4i and the chipset they used were also bad leading to heating issues and battery drain. But with current devices like Redmi Note 3 and Mi Max I guess they had found a way back to this market. I don’t Mi5 is a good device it is getting some rage reviews from customers.