Xiaomi’s Global Long March Moves Into U.K.
* Xiaomi is scheduled to open its first standalone store in the U.K. later this month
* The British launch will mark the first time Xiaomi has sold its premium high-end Mi8 Pro outside of China
(London) — Britain has become the latest stop on Xiaomi Corp.’s global roadmap, as it tries to show the world it can compete with big names like Apple and Samsung not only geographically but also at the high end of the market.
Best known for its budget products that have made it the world’s fourth best-selling smartphone brand, Xiaomi is set to open its first standalone store in West London on Nov. 18. Its phones will also be sold through network operator Three from Friday.
Britain will join a growing list of other Western European countries in Xiaomi’s global expansion over the last year, alongside the likes of Spain, Italy and Greece. Those more affluent markets will be key to the company’s longer-term aim of selling premium smartphones typically costing $500 or more, which carry fatter margins and are less hotly contested than the cheaper models that now make up the big majority of Xiaomi’s sales.
But the company could face an uphill battle finding its place in a market now dominated by Apple.
“We’ve got innovation, quality and design but also one of our key pillars is honest pricing and that’s what we’ll be bringing to the market,” Wilkin Lee, Xiaomi’s U.K. sales and marketing director, told Caixin ahead of the British launch. He added the company will stay true to its commitment to cap its profit margin at no more than 5% to keep its prices competitive.
Lee said the British launch will mark the first time Xiaomi has sold its high-end Mi8 Pro outside of China, which competes with premium models offered by Apple Inc., Samsung Electronics Co. Ltd. and Huawei Technologies Co. Ltd. It will cost 499 pounds ($649), around half the price of an iPhone. About 80% of Xiaomi’s sales elsewhere in Europe have been dominated by its lower-priced models from its Redmi line, according to IDC.
Xiaomi, which gets more than a third of its revenue from outside China, found initial success in price- sensitive, developing countries like Indonesia and India, where it is the top selling smartphone brand. A year ago, the company made its European debut in Spain, where it already has 15% market share, according to third quarter data from Canalys. It also sells its phones in Italy and France.
However, Apple could be a tough rival in the competitive U.K. market. The U.S. tech giant accounted for 47% of U.K. smartphone sales in the third quarter, according to Canalys, compared to just 21% in Europe, where Samsung holds the top spot.
Of six people Caixin Global polled in central London a day before the local launch, none had heard of Xiaomi, though most were familiar with rival Chinese smartphone brand Huawei. All were iPhone users.
“I’m used to using it. People say Samsung’s better but it’s too much hassle to change,” said Joe Fifield, who said he’d been using an iPhone for 10 years. His colleague Rob Doherty said he thought Apple was too expensive but worried about transferring his music collection to an Android phone.
“Apple customers are the hardest to displace,” said Ben Stanton, a senior analyst at Canalys. “Despite this, there is certainly targetable Samsung business in the U.K. for Xiaomi, as well as declining legacy brands like Sony and LG. I expect Xiaomi will break into the top five vendors in U.K. quickly,” he added.
Xiaomi listed in Hong Kong in July after an initial public offering (IPO) that raised $4.7 billion. It reported a surprise profit in its maiden results, fuelled by overseas sales. But despite that, investors have remained skeptical about the company’s future prospects in part due to its reliance on the low-end of the market.
As a result, the company’s Hong Kong-listed shares have lost about 20% of their value since their IPO. Adding to the concerns, Xiaomi saw its comeback story in China, which accounts for about two-thirds of its sales, recently come to an end as it posted its first smartphone sales decline in the market in more than a year during the third quarter, according to IDC.
Xiaomi’s biggest competitor in the U.K. is likely to be hometown rival Huawei, which has 13% share of the market. In particular, Huawei’s Honor brand has performed well by targeting more price sensitive consumers.
However, while Huawei relies on splashy marketing campaigns, Xiaomi will take a different approach. It will focus on low-cost marketing targeting tech-savvy young people via social media and growing a community of Mi fans, a tactic it has used successfully in China and other overseas markets.
Lee said Xiaomi held its first fan event in the U.K. two weeks ago that was attended by more than 100 people.
“The fans are the center of what we do. We engage with them directly and proactively … and that sets us apart from everyone else,” he said.
He also believes that young families will be attracted by Xiaomi’s competitive pricing and its “ecosystem” of smart devices, including kettles, fitness trackers and scooters that will also be on sale at its U.K. store.
Europe, and the U.K. in particular, has become a more attractive target for Chinese technology companies with global ambitions as Chinese investment has come under greater scrutiny in places like the United States, Australia and Canada.
Rival Chinese smartphone vendor Huawei has faced pushback over national security concerns in the U.S., with network AT&T walking away from a deal to sell the Chinese company’s smartphones there earlier this year. Some analysts have said such pushback could be an obstacle to Xiaomi’s international expansion, but Lee said he didn’t expect to encounter any hostility toward the brand among consumers in the U.K.
Contact editor Yang Ge (firstname.lastname@example.org)
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas