Impact of US-China Trade War on Xiaomi's Business

This article discusses the impact of the ongoing US-China trade war on Xiaomi's business, including the challenges faced in entering both markets and the negative effects on business growth and success.

CONTEXT OF
INTERNATIONAL
BUSINESS

Table of Contents
INTRODUCTION.....................................................................................................................................2
Brief description of US - chain trade war................................................................................................3
Business analysis.....................................................................................................................................4
REFERENCES..........................................................................................................................................7

INTRODUCTION
Xiaomi is Chinese electronic organization founded in 2010 by Lei Jun in Beijing, they
make and invests in mobile applications, bags, smartphones, laptops, earphones, fitness bands,
trimmers and many other products (Greeven & Wei, 2017). It is youngest firm on fortune global
500 list, they released their first smartphone in 2011 and continuously gained revenue as well as
market share in china that help to become nation’s biggest smartphone organization. Xiaomi is
the world’s fourth largest smartphone producer, lead in largest market, India and biggest market,
China. It developed board range of customer electronic goods, including smart home device
ecosystem. In china, Malaysia, Singapore and India organization has 15,000 workers. They
expand their business many nations effectively including Philippines, Indonesia and South
Africa. Recently company named one of the qualified candidates for virtual bank licenses in
Hong Kong. They introduced Xiaomi Mi 9 phone which come with new technology that is
fingerprint scanner. It is considered as second products of this brand with different technology
available in market. They see hardware sales as means of providing services in long term and
delivering software. Firm is internet organization with smart hardware and smartphones
connected by LOT platform as their core business. With vision of being coolest business and
being friend with their consumers, Xiaomi is devoted to constant innovation, with unwavering
centering on efficiency as well as quality.
They relentlessly build their amazing products with honest prices to let every consumer
in world enjoy the best and better life through creative technology (Shih, Lin & Luarn, 2014).
Currently, firm goods are present in more than 90 regions and nation all around the world,
company have top position in many markets. Business achieve strong and high growth across all
business segments. They continued to shine even in face of high competition from international
and domestic peers with powerful and unique business model. It is considered as china-based
investment holding firm principally engaged in development, research and sales of smartphones.
The organization mainly conducts their business with the help of four segments. First segment is
smartphone that engaged in sales of products, second one is lifestyles and LoT goods segment
that engaged in sales of other in-home products, including laptops, smart television and artificial
intelligence speakers. Third segment is internet service that engaged in provision of internet
value added services and promoting service. The last segment is involved in facility of repair

services for their hardware goods. The aim of business is to regularly exceed expectations
through innovation in hardware, services and software. Xiaomi smartphone shipments for India
sustained to demonstrate powerful progress momentum and reached number one market share
position. Organization reach at international market, with continue to work on fundamentals,
reinforce their abilities in innovation, supply chain management and strengthen quality control
strategy (Casanova & Miroux, 2019). Accordant to market investigation global data corporation,
organization is placed at fourth biggest position in world where they gain high amount of profit
and generate revenue rather than before. Xiaomi expand outside of home town with their first
international headquarter in Singapore where they operate business efficiently.
Brief description of US - chain trade war
Trade war is economic issue resulting from extreme protectionism in which state create
and raise tariffs against each other in response to trade challenges developed by US. US and
China trade war is ongoing economic problems between both nations. In newest development in
trade dispute between United states and China, the Trump management announced delay to
newly planned 10% tariffs on another $300 billion of Chinese products. The president began
setting trade obstacles on China with goal of pressuring it to make modifications to what US says
is unfair and unequal trade practices. Among those trade activities and their affects is increasing
trade deficit, forced transfer of American technologies to China and theft of intellectual property
(Wisner, Tan & Leong, 2014). The president of US supported tariffs to reduce trade deficit, they
promote domestic manufacturing saying nation was being ripped off by their imposing tariffs
and trading partners became major plank of their presidential campaign.
The trade war impact on farmers in US as well as manufacturers of products, in other
nations trade war between US and China caused economic damage, on the other hand some
countries get benefited from maximizing producing to fill gaps (Seabrooke & Wigan, 2017). It
criticized all over the world, including by US agricultural companies and businesses, however
most farmers continued to help Donald Trump. China replies, threatening their own tariffs of US
products, stating that United States launched a trade war. Export and import markets in number
of countries feared charges would interrupt supply chains that ripple around the world. In US,
trade war brought difficulties for manufacturers, it increases prices for customers. Recently US
release their new regulatory guidelines for their telecom networks process to secure telecom

networks from national security threats. US and china are key players in world, but their
relationships are now under threat, china reactive tariffs cover different categories of copper
waste, scrap metals and other secondary resources including recovered paper as well as fiber
from recycled cardboard and paper in US, all applicable materials for circular economy. Trade
war between china and US is current ongoing trade war that impact on overall productivity of
business in both nations, it decreases the profitability of local business as resulting decreasing
profit margin rather than before. The relationship between both countries were changed forever
when China Joined WTO. The world bank adopted plan to help china with $1billion to $1.5
billion in low interest credit annually. Due to trade war between both nations, Donald Trump
president of US called for WB to stop their loaning money facility to china. It is considered as
latest conflict of this trade war that impact on growth and prosperity of China. The pressure feel
by china through US is highly affecting the current statues of nation, due to trade barriers created
by US businesses in China as well as large companies cannot be able to expand their enterprise
effectively in another place. Both countries were locked in bitter trade war, over passing year,
world’s two biggest economic obligatory tariffs on billions of dollars’ worth of one another’s
products.
Business analysis
Political factor-
It is activities related to local and national government policies & regulations that have
impact on most business. Political instability and stability, regulatory shifts and new legislation
that will have substantial impact on how companies operate in existing or new market. Due trade
war between China and US, any organization cannot be able to enter into both nations easily,
they has to face many difficulties that impact on its business growth and success within existing
market negatively. For example, Apple is an American company when they will open its new
subsidiarity in China organization has to face many issues during trade procedure because of new
trade policies after trade war between both nations. Ongoing trade war with china affecting
company shares negatively, US government do not allow business to open new subsidiary in
China, the financial market and global supply chain is also affected due to this war. Major sales
support to Apple organization comes from outside of US such as China amounting to more than
billion (Trappey, Trappey & Wang, 2016). So political instability in this nation after trade war

directly affect business position negatively. Trade war between both countries, create barriers for
company which they cannot be able to remove in their way towards opening new subsidiary in
China, it might be decrease its wage growth. This factor is highly relevant to firm by highlighting
the situation and results of trade war, that band opportunity for US companies to enter into china.
Company has to deal with issue and trade barriers when they want to open subsidiary in 2020.
Technological factor-
Stakes of information technology keeps higher as compared to other sectors when it
comes to gaining revenue. The organizations who earned well, innovated with time and Apple is
no doubt one of them. Technological advancement provides the many benefits to company as
sustain in market. Organization is well known for their innovative products and range of iPhone
as well as their gadgets, they also recognized for their stunning concept of design, they created
most attractive and finest designs for its products that business contemporaries cannot match. It
is tech giant so company is bound to be affected by technological modifications (Kushida, 2015).
Apple is losing their position to Google in list of world’s valuable brands. Growth in mobile
technology drive sale of Apple company rather than before. By applying different technologies
and advanced features in their products organization will gain competitive advantage within
market place effectively. Due to technological advancement cloud computing demand is growing
more and more which is quite beneficial for business as it is one of the best opportunities to grow
firm. By offering cloud services to limited extent. With support from organization corporate
structure by developing expanded cloud structure firm increase profitability of business in
providing this service. Along with this, technological advancement creates competitive
environment within market place where competitors adopt the same technology for their
products which make negative impact on growth and revenue of business rather than before.
Legal factor-
It is external factors which refer to how regulations and law affected way businesses,
perform, managed and consumer behave. Profit margins, product transportation, viability of
certain markets is examples of things which get affected by legal factors. Regulations and rules
are leading challenged before any business, obedience is absolutely important of business profits.
Apple is facing some legal issues in their nation, as they restored imports of some of products
parts used in iPhone that was totally and earlier banned by US government, it directly impacts on

its production procedure as well as productivity of business (Khan, Alam & Alam, 2015).
Without considering laws and essential regulation company cannot be able to sustain for longer
within marketplace effectively as it decrease it financial performance rather than before which is
not good for brand image. Pressure from government on privacy in digital age resulted in
increasing privacy laws on business like Apple. This legal element is threat that will impose
expensive regulatory compliances needed and more limits on firm. Along with this organization
is facing some legal barriers related to their policies and practices on after sales services as well
as other areas of company. For example, in EU and US among other nations they faced legal
battles and strong criticism regarding their policies on third party repair services.

REFERENCES
Book and Journals
Casanova, L & Miroux, A., (2019). The Rise of Chinese Multinationals: The Changing
Landscape of Global Competition. In Chinese Acquisitions in Developed Countries (pp. 1-16).
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Greeven, M.J. & Wei, W., (2017). Business Ecosystems in China: Alibaba and Competing
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Images of China and India. Routledge.
Khan, U.A., Alam, M.N. & Alam, S., (2015). A critical analysis of internal and external
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Seabrooke, L. & Wigan, D., (2017). The governance of global wealth chains. Review of
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Trappey, C.V., Trappey, A.J. & Wang, Y.H., (2016). Are patent trade wars impeding innovation
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Wisner, J.D., Tan, K.C. & Leong, G.K., (2014). Principles of supply chain management: A
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