Xiaomi, the Chinese giant seems to be slowing down. Is it due to a lack of presence in the offline market?
Xiaomi, the Chinese company headquartered in Beijing, best known for their relatively cheap handsets, isn’t growing as much as the competition. While they did release a huge amount of devices lately, they still got ripped off of their supremacy in the Chinese market, dropping from the first to the fourth place.
Who dethroned them, though? Companies such as OPPO, Vivo and Huawei, which (not by chance) all share one common factor: presence in offline markets.
If we take OPPO as an example, we see how its offline market contributed for more than 70% of total sales in China, with an offline retail penetration beyond tier-2 and tier-3 cities, allowing OPPO to reach the 13 percent of the total market share. Same goes for Vivo and Huawei, although with smaller numbers.
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Xiaomi, on the other side, has always been an “internet company”, as they like to be called. While this gave them a big push at the beginning (as people were finding good devices at lower prices) it doesn’t seem to be enough anymore.
Earlier this year, at the Barcelona MWC, everybody was expecting the Mi5 to be the opening door for Xiaomi into the world distribution through offline retail, but it hasn’t been the case. Resulting in the relatively poor success of the device, among other factors.
Hence, maybe it’s time for Xiaomi to follow its Chinese competitors and finally get their hands in the offline market. Although we’ve no way of knowing the final development, we know for certain that the current marketing strategy isn’t giving great results.
Nonetheless, what are your thoughts? Do you think it’s going to happen and if so, when? Let us know in the comments section below.
Blaming the offline market is BS.
Xiaomi lost share because they failed to deliver and because online competition got tougher.
Last year they were very late to update devices, the updates were often insufficient and the Mi Note aimed for higher prices. They raised funds in late 2014 and changed strategy.
They lost share to new or small players that decided to get aggressive like LeEco, Meizu, 360 Mobile and they lost online share to most other major players that lost carrier subs and had to focus more on online.
Their ROM being seen as slow, bloated and full of ads and their less than stellar support made things worse.
Their international expansion stumbled , India got difficult, they had to put the breaks on in Brazil….
The lack of ideas and originality is a problem too.
To make it worse they also panicked and started spamming with devices. They need a product line that is easy to remember and each device launch to have a high impact. At this point it is difficult to remember all their devices.Used to be 1s, Note and Mi4 and maybe Mi3 still selling and all were pretty great. A mid ranger at a great price, a bigger and meaner midranger at a great price and a proper flagship at a great price.Very easy to know what’s what and each device was pretty much leading in value.
Expanding offline would result in higher prices and doesn’t address any of their many problems, would result in even more online share loses and uncertain chances of offline success.
They need to fix everything that is wrong with Xiaomi before making it worse. Blaming it on anything but yourself doesn’t solve the problem. They need to understand that they haven’t done enough and a lot of things can be done better. Without that nothing will help in the long run.
Wow, I completely agree with everything you said there; never thought I would say that. Xiaomi’s problems run much, much deeper than no offline presence, something I’ve said for a long time. I also think Meizu are going to suffer in the same way as they too are releasing too many handsets that overlap way too much in specs and pricing. Whilst I may not agree with Vivo and Oppo’s high pricing, someone is clearly buying their products at a much greater rate than that of Xiaomi.
Oppo and Vivo hare interesting case studies, they have successfully markets themselves as lifestyle products that people will pay big money for even when the specs don’t always match up. Oppo has also benefited from being on of the first to launch in Europe officially.
I am not sure what is going on with Meizu. The Mx6 and M3 were both excellent launches for them and sold very well. And despite the backlash from many on sites like this they actually had a good launch of the Pro 6. But now they seem to have a new phone every month and the newer phones are using the same exact specs as the older phones just with newer body styles. I think a lot of it is traced back to the Ali investment, they want to get Yun Os on as many devices as possible, even if it means destroying Meizu in the process. I am very interested to see Meizu’s sales at the end of this year. Meizu has developed a very loyal fanbase in China but I am not sure it is big enough for all these new products coming out.
Brazil was a huge gamble that never paid off but also never made sense. It was more of a personal mission of Hugo Barra, who is from Brazil, and that got in the way of sound business advice. Brazil is one of the hardest countries in the world for an international business to sell in. They have one of the worst and most confusing tax system in any country. Xiaomi should have gone to Russia, Turkey or Mexico like they had originally planned.
But I agree with most of what else you are saying, it has been a bad few years for Xiaomi. It seems like their success has been their own worst enemy.
As brazillian I’m totally agree with you, they could have made success here, but not that time.
Of topic!
You remember argument we had over which is a better SoC? S562 or X25?
How you claimd haw 10 cores are much better solution that Core Pilot is fantastic & how it will save a lots of power. Also how it has a large manufacturing advantage.
Well hire you go:
http://www.anandtech.com/show/10545/the-meizu-pro-6-review/5
All of that demystified along with answers about poor GPU performance & thermall throttling.
Now to keep thngs more in line of our real debate take a close look at the data at “balanced performance” mode & do also compare it to the S650 in the Xiaomi Redmi 3 (Pro). So you see deca core & power savings is a pure bullshit & how even best from MTK (X25) purely loses even from S650.
I whose honestly surprised that it losses even in arias that it should have scored easily that actually tell us how Core Pilot (at least in this deca core) is solution that is far from anything good. Also take a look at S820 power metric as I also declared how it’s a very far from good design.
Hopefully in the future you will actually at least think about what I think (not that I have to be right tho).
You are one of the rare peple hire that I actually can argue with about things like that around hire so I would like to continue that practice in the future. ????
One more thing. ?
Wow, looks like the Pro6 is a step backwards from the Pro5
Couple of steps backwards actually.
I don’t comment his bullshit anymore, I just laugh quietly because then he gets offended and starts acting like a child.
They lost market mainly over Oppo and Vivo.
Numbers don’t lie.
Both Oppo and Vivo might offer a slight better quality but Xiaomi wins over the price/value ratio.
Without going deep into details, it’s safe to assume that Xiaomi should have led when it’s about total shipping volume (let’s keep the revenue of this discussion).
They did for a while, but then something happened.
Offline market is one issue, no doubt.
You have more chances to catch a fish in the ocean rather than a pond.
The more you expand your area of operations the more you sell.
They should fix this if they want something to change.
But there’s still something going on…
Like I said before they led the market for a while, head to head with Huawei and then something happened.
In my opinion they failed on satisfying their customers. It could have been a bad post sale service, or fail providing new devices that could sell well.
Marketing says that it’s easier (and cheaper) to keep your older customers rather than find new ones.
If this is the issue then it’s going to take money and time to fix it.
If I may add, I’m pretty sure that both oppo and vivo invest into marketing, something that always pays off in the long run. Just look at htc and sony: they make good phones, but their mobile divisions are on the verge of bankruptcy because of their marketing policy. I feel like xiaomi, as you would expect from an online-based company, acted like a video gone viral: their marketing strategy is based on people talking about it, and it worked for a while, everyone talked about it for a while. But now, the thread is not that trending anymore, destroying their only source of advertisement.
Plus, they keep with their odd choice to kill a device with little detail missing here and there (like no nfc, or not granting the full network support for bands they would really need for international customers)
After contacting Xiaomi’s user help service at least 10x in last couple of days, and being rejected for “not providing all information” (even though i spend 5-10 minutes every time, to fulfill all info they ask for)… And my experience with Mi4i, i can for shore say it wouldn’t cross my mimd to buy Xiaomi ever again (and i did have 3 phones from them, a lot of headphones, speakers, armbands, lights….).
There are other manufacturers, who actually care about people who is buying their products and AFTER they give them hard earned money.
So you’re saying that you had problems with al those products?
I guess you are one of those unlucky persons because internet is full of good reviews about their products like earphones, mi band and so on.
I’m a happy owner of a mi band 1s and Xiaomi Hybrid myself.
The MI4i is a crappy phone with a faulty SoC though
Nope, i’m saying that i have problems with Xiaomi’s user support…but you read it how you eill, and defend those who is paying you… It’s ok, we all know you are payed to write
You guys all know that Xiaomi pays me to write nice about them?
Am I the only one who doesn’t know it yet? Because I haven’t gotten any check yet… Should I contact them to check my mailing address?
Anyway, i was curious to know what kind of problems you had with mi band and earphones.
To me they are both excellent products for the price.
I was also very happy with my old MI4.
I know for sure that MI4i was a crappy phone, and i wouldn’t say that if they pay me.
You can also check that i have also talked bad about my current Redmi Note 3 Pro.
The phone is ok at best, and full of software issues.
As for support, they don’t sell in your country.Period.
I’m assuming that you live in East Europe and I’m also assuming that you bought from third party resellers.
If you’re expecting support from Xiaomi then there’s something wrong with you and not with them.
We ALL know here that when you buy Chinese phones from resellers you should expect no Warranty. If you didn’t get it yet at this point then you should probably go and buy a phone at your local store.
living in Norway and i bought in Singapore…No support for my country or rest of the world beside few (large) countries in Asia, but beside HW problems, wich i found on hard way that they won’t help about it i had and problems with their software….(not just buggy OS) MiCloud, MiAccount….that is where i have problems,and it’s something that they should be able to help, no mather where i am from, or where i am using their devices.
but no…to much to ask.
They should go to Mexico, Brazil , Argentina and Chile, those markets are made to sell their Redmi line first and then their flagship line and there’s almost no Oppo or Vivo to compete with
They already tried to go to Brazil it was an absolute failure. The international tax system in Brazil killed any chance of them competing there.
However they are in Mexico and Colombia and it has some success. In Peru is even crazier… it sells hundreds of terminals… maybe because the competition is selling even lower tier smartphones on that tier.
In Brazil they failed since they demands to fabricate the smartphones on there… obviously even Samsung and Apple has a LOT of problems on there and they are thinking to give up on that market which now is one of the worst of South America, only avobe Ecuador and Venezuela.
They were planning to manufacture here using Foxcomm factories, so they could avoid importing taxes, Btw Brazil still a hard place to start, in my opinion they needed a little more planning (even considering that here sucks), first Redmi 2 wasn’t enough here, people were expecting Mi4, Redmi Note series at least. Second the Xiaomi model of selling isn’t something brazilian regular consumers are familiarized. Asus and Lenovo are doing pretty well here with their models. Xiaomi could have been a success here… but honestly, it wasn’t the time to come here, they should have focused in other Asian countries. I can only imply their rush wish to start here due to Hugo Barra 😛
That’s one of the biggest problems with Xiaomi’s expansion, often times they expand to a new country but they use older phones. They did the same thing in Thailand, they only offered the Mi4 for about the first year of being there, when the Redmi’s would have sold much better in that economy.
They should expand using third partie partners on every single larger market. By that I mean finding a legal distributors or building their own background distribution service meaning opening representation offices along with legal representative, marketing, management, repair & supply service. So that third panties can offer their products & by that I firstly mean GSM service operators, shopping chains and cetera. It would certainly increase operating costs but not on that large margins that it would significantly alter the products princess (at least on large markets). This is the way to increase presence along with costumer care & it would significantly boost sales. It is long and rocky way to go but I don’t see any other. So you see its not that much how you order your product (picking it up personally or ordering it online) but what you get afterwards also.
& their is also much more.
Before anything they should re consolidate & pull their shit together. Make a plan & stick to it. Do not make xz number of products with a, b, c variants of the same product that you can not efficiently cover & backup (aka 30 handsets models wile most of them with two or more variants of SoC). Make a one good representative in each segment (eventually two) on a tick schedule accordingly to a plan & secure software update & polishing strategy. Don’t put a heap pile of bloat software, make it as simple as possible to ensure you can easier & faster secure update policy along with security. Pay more attention to community as you do have one as that is your best source of feedback concerning actual user wishes, your best marketing & long around buyers. Reward & expand it in any way you can, specially reward good & known contributors tie & bound them future as they already helped you.
So it’s basically 90% management & marketing (with ethical imperative) but I don’t have time to write more about it.
So long & best regards.
Very simple. They turned their backs on their community that got them started, in hope of short term revenue. It backfired. The fans feel let down because of various lock down, devices are difficult to modify now
Second their Sammy style refresh rate, dozens of versions, color, storage, RAM, SoC, means support and updating got slow. You bought a Mi3, you knew you had a flagship for a year. Now your item becomes a has been, a few weeks after you received it. Look at Oppo, people will pay high price, to know your device won’t be replaced after two month.
Xiaomi, dropped the ball in 2016 and their moves seem on the brink of hysteria. Rebound now will mean huge investment in making something new and revolutionary. Or deep price cuts, making smaller revenue, and, yes, upsetting the buyers who bought this year for higher price. Both are bad. So they just float now, desperate. New model every month. Gain 1 new buyer, upset 3 previous buyer who will swear never buy a MI device ever again.
Going to Europe or USA, is a wildly expensive journey. To set up service and point of sales, warranty and support, all salaries to be payed in western standards, patents etc. You can’t sell the phone for 150$ in the 1st world and make a profit. If you sell it for 400$ you have strong competition, established players, channels to cell operators. Either you go all in and stay out. So they will go on, staying out. Huge investment to go all in and no guarantee for success. If you sell half the price of samsung or LG, it’s a loss. If you sell for China price, it’s a loss on investment. No way around this and they know it too
Anyone else here getting da ja vu? I should get into fortune telling because these were all issues I addressed many moons back only to be met with backlash and hate.
On a positive note I did see Xiaomi billboards at bus stops in Guangzhou a couple weeks back.
TBF you have been calling Xiaomi the devil and a failure for about 5 years now. You would also make laughable comments like “no one in China uses Xiaomi”.
Nice to see some people don’t change.
I travel to China nearly every single month and I stayed in Guangzhou, Shanghai, Shenzen and Beijing for months at time in each city. But nice try. Also never said I think half of China is using Xiaomi, that would be impossible given China’s population vs Xiaomi’s sales. But I have said in all my travels there I have seen numerous people using Xiaomi, Oppo and Huawei phones as opposed to your claims that everyone uses iPhone and Samsung.
I live in Beijing, I lived in Inner Mongolia before. I have been in China for before Xiaomi decided to produce phones. Cheap phones, since the goal was only to produce a cheap vehicle to reach the population, and therefore sell their own softs. I have been so long here, and not only travelling, not only few months to teach English and test the White Fame, I have been here long enough to tell you that you are dishonest, or blind. Even not being a great fan of Xiaomi for many reasons, I disagree on the 5% Xiaomi users you encounter. Even in Guangzhou. And your vision of the “student buying Xiaomi” is really wrong. Actually, a lot of old people are good customers. Not that they love the brand, but that their kids don’t see the point to buy an iPhone for them, since they don’t care, and they only need to see the thousand of daily baby pictures, the same weixin moment celebrating Mao’s greatness and so on. I see Xiaomi everywhere, and in all type of hands. I see a great number of Mi3 but even more Hongmi 2. It’s everywhere. From when Xiaomi cared about the customers, and sold phones around 500 rmb. For a Chinese earning 2500, it is a great deal. most of the people here have more than one phone. They have an iPhone, for social status matter, not up to me to judge them. But they also often have a Xiaomi. A Note, a HongMi 2, 2A, Mi3, Mi4 and HongMi Note 1 or 2 are the most seen Xiaomi models in the subways, streets, restaurants and shopping malls. Of course Samsung and iPhone still sell phones. But there is more Chinese able to buy xiaomi when they earn 2500-4000rmb, than Chinese able to purchase Galaxy, iPhone around 6000-8000rmb. That’s it. Or you knowledge about your host country is very low, and you don’t really leave your comfort zone. Have a nice arrogant day.
Xiaomi could do better in Indian market atleast and more than triple their Indian shipments, by a. Fine tuning devices by putting in dedicated dual Sim slots and Sd card slot instead of shitty hybrid ones which they are pushing.Also going off line atleast in India would mean much higher offtakes, because Indian mobile sales are still dominated by players who are off line. Could mean additional 5-10 million sales for Xiaomi.
Xiaomi should look to the model that Huawei is currently using and to a lesser extent ZTE and OPPO. They should create a sub-brand like Honor that will be made with international markets in mind. Something easier for westerns to pronounce (I always laugh listening to friends and family trying to pronounce Xiaomi) and something that is created, marketed and intended for western markets in particular. Right now every product Xiaomi makes is specifically for the Chinese market, everyone else is an afterthought.
Besides doing that they should also have universal product launches for every country they are officially sold in. Work out a deal with Ericsson to sell MTK devices in India, most of the other companies have. Some countries are still selling the Mi4 as a new phone. Xiaomi is too big of a company to still have 99% of their focus be on the Chinese market. They need to look to their international/Asian markets if they want any chance at future growth.
shaayyoomee !
thats how i call it !
Actually I would mention TCL as a rool model but shortcut like one they took is no longer available (Alcatel).
Very good point.
Xiaomi needs to be much much conspicuous on the street, offline. Online only platform is not going to bring a permanent presence for Xiaomi. Especially in India, where the man on street doesn’t want to buy online. Only geeks do hardcore online shopping including purchasing phones online.
yes OFCOURSE !
DAMMIT XIAOMI ! you are lame and stupid for not making physical shops AFTER you went FILTHY RICH with your phone sales !
JACKASSES !
Wow what amazing insight you have
sarcasm much
serves them right for NOT coming to PAkistan !
Xiaomi failed hard in listening to their comunity… that is the reason they failed hard.
They instead on improving less smartphones, they released way more models than Samsung.
Now they are even more expensive.
They didn’t used the chance to enter to the international markets and now they are paying their bad desicions in the hardest way.
They won’t die soon, but they might be bought at the end.
Perfect.
Why Gizchina readers should care about Xiaomi’s offline presence in China more than their online presence in their own countries? How many more years we have to wait?
Their so called global expansion is in such a sorry state.
Be a real global company then launch your phones accross the globe
simultaneously.
They can’t handle it.
They can’t even launch a product in China and India simultaneously
Their sales are pretty much ok. .. I don’t see a reason to pursuit growth!
With devices such is Redmi PRO, the have little bigger profit, and that means they are doing just fine.
Offline sale wouldn’t do much for a sales numbers, but after sale support could help…
And not selling devices with that much problems (all their devices have a lot problems with MIUI, which works better on one Samsung device, then Xiaomi’s own….but devices like Mi4i will turn away all buyers from xiaomi)
Getting rid of retail lowers overhead. In this cutthroat industry margins matter most for the long term sustainability of the budget sales model.
Between them i wonder who makes the most profit?
just add european b20 and there you go ! bingo