Xiaomi's Market Entry Strategies

This assignment requires students to analyze Xiaomi's market entry strategies in India. The company needs to drastically plan for entering the offline physical retail market as only 28% of customers are served through online marketing in new markets like India. A majority of smartphone purchasing customers still prefer to buy handsets from physical outlets. To reduce costs, Xiaomi can set up manufacturing plants in different markets where they operate, utilize local workers and equipment to reduce manufacturing and assembly costs. Additionally, the organization can establish investment and distribution tie-ups with other companies to reduce the risk of operations.

Running Head: SELLING AND RETAIL MANAGEMENT
Selling and Retail Management
Student’s Name
University Name
Author’s Note

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Table of Contents
1. Introduction..................................................................................................................................3
2. Discussion....................................................................................................................................3
2.1 PEST analysis of Xiaomi..................................................................................................3
2.1.1 Political factors................................................................................................................3
2.1.2 Economic factors.............................................................................................................4
2.1.3 Social factors...................................................................................................................5
2.1.4 Technological factors......................................................................................................5
3. Critical uncertainties and future scenarios...................................................................................7
4. Recommendations and Conclusions............................................................................................8
Reference List..................................................................................................................................9

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1. Introduction
This report is based on scenario planning for xiaomi making assumptions of what the future state
of business is going to be life and how the business environment in the various markets of
xiaomi will change dynamically in the future. A PEST analysis of Xiaomi has been conducted in
this report in order to highlight the current state of business affairs and the future implications of
the various external factors on the business of the company. Deriving from the same research, a
sales scenario has been planned to identify the future set of uncertainty is that Xiaomi will face
and lastly a set of business implications have also been provided for the organisation.
2. Discussion
2.1 PEST analysis of Xiaomi
2.1.1 Political factors
The present system of governance in Hong Kong has helped xiaomi to come up front into the
line of mainstream mobile networking companies. It can be predicted that in the future there’s
also the managerial leaders of xiaomi will not be taking any divergent policy abstract from this
historical norm. As highlighted by Cai (2016), the industrialized government priority towards the
mobile communication sector in order to develop innovative and disruptive technologies with an
eye on capturing the foreign markets has benefited the growth of Xiaomi to much an extent.
Another Important political factor that will go in favour of the company in future is the political
stability of the current market where Xiaomi operates. The company has her business spread
over numerous countries. This is why the written technology is supposed to be industry specific.
However, populism across the mobile and Smartphones market especially in the European
market will have its Shadow fast on the market of Hong Kong also. As an outcome Tse (2015),

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states that greater instability is expected to develop in the Hong Kong telecommunications
sector. In turn Shih, Lin and Luarn (2014), comments that this will raise the competition for
xiaomi in the other potential Asian markets like China and India also. All the Chinese mainland
is a free trade area more stringent in China along with higher corporate tax levels that makes the
profit biting lower compared to other Asian markets. Leading telecommunication brands Like
Xiaomi and Tencent have the priority the influence local political factors in favour of their
business. However, Chen et al. (2014) states that along with popular political support from the
home market in China, adverse political factors affect the company outside China also. For
evidence the Taiwanese government regulated third party survey in order to detect cybersecurity
threat in Xiaomi in the year 2014 which cause severe damage to the brand equity of the company
in the Asian market.
2.1.2 Economic factors
Economic factors that can affect technological companies are diverse and multifarious. Factors
including the microeconomics climate of the country, taxation rate, inflation interest rates as well
as currency exchange rates along with other analogous factors can impact the business of xiaomi,
economically. For evidence, Glowik (2016), provides that the cost of labour in specification
market is low due to the high and unemployment rate in the regions. The average cost of labour
for workers in China had been 360 US dollar per hour in 2017. Since Xiaomi started its market
operations in the country 2011, they have seen a growth in factory workers' wages by about 64%
(Gupta & Dhillon, 2014). Search economic tendencies directly impact the competitive advantage
of organisations. It can be implied that the cost of operations of other brands like Honor will
become less in the Asian markets compared to xiaomi if the wage rate enhance by another 6 to
10% within 2 years (Hyun, 2017). This is why, in order to keep the sales parity balanced, xiaomi

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needs to explore more new market with easy penetration opportunities. In this context, the
markets of India and UK can turn out to be most favourable business loan for the organisation
vision 2020 to 2025.
2.1.3 Social factors
The gender roles are involved in the Asian market where Xiaomi has maximum sales. Another
important factor is growing education level in the countries like Hong Kong, China and India. As
a part of the globalisation strategy, the company can develop research and development centres
in the local markets. As Rawal, Awasthi and Upadhayay (2017), states, this will have a major
impact on the cost starting of the company in future when the market stability will fall and
competitiveness of the market will be higher. The power structures are also variable in the
various markets where the company operates. As an evidence, high level of income in equality is
a stock factor in the Asian markets. The same is applicable for the home market of Xiaomi that is
Hong Kong. This is why the company has face difficulty in developing a strong base of target
customers. Moreover, as highlighted by Xie and Liang (2013), the acquisition of marketing to
Capital has also been slower because of which xiaomi has still not been able to enter into the
major European markets like Samsung. In future the organisation should focus more upon
dynamic and open market for telecommunications like India, Bangladesh and other countries of
Southeast Asia along with Australia, New Zealand and other countries in the same geographical
zones. In the South Eastern countries, the market of mobile technology is highly emerging. There
is huge scope for Innovation and market acquisition in markets like India. On the contrary in the
Australian market, market entry with less capital is possible and the saturation level in the
telecommunication market in the country is very low along with high retail opportunities. This is
because the spread of disruptive mobile Technology has not yet been achieved in Australia.

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2.1.4 Technological factors
Companies like Xiaomi survive much on technology transfer. However, since most of the
innovative mobile communication brands have developed From Asian market, in the modern
domain of globalisation technology transfer directly accountable to increasing market
competition for the companies of Asia. The culture of technological innovation is very strong in
the mobile manufacturing sphere. This is why, Pon, Seppälä and Kenney (2014), states that the
companies like Xiaomi are reluctant to transfer a licence of their patented Technologies out of
the fear of creating competition out of collaboration. The cost of investment in both macro and
micro level in the Global mobile business sphere is increasing at a high rate. Hence, in this
context it is also essential that the newly emerging organisations maintain their sales parity and
attempt to garner higher market share.
The company should conduct proper market analysis for technological innovations by the
competitors in the specific market before making market entry. This will help them to develop a
good insight regarding the technological disruption that the competitors are planning and also
understand how the Global Business industry of Telecommunication is expanding and thereby
they can frame their future strategies also. Another important technological factors that xiaomi
should consider is intellectual property rights and protection of patents. If Xiaomi gets more
protection against their Intellectual Property Rights, then they can freely invest in research and
development. The potential of 5G in attracting customers is also needed to be considered under
this domain of social factors. The company is highly engaged in to developing the User
experience with five G by gradually increasing speed and access of this network in almost all the
countries where they are operating (Steenkamp, 2017). If they are able to offer a global 5G

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network in a span of another 5 years from now, the customer experience of xiaomi will be
dramatically transferred by then.
3. Critical uncertainties and future scenarios
Xiaomi started their mobile sale 4 years ago. Given that, they have made astonishing progress in
the smartphone market of Asia. In the first and second quarter of the financial year 2017-18, they
were the largest vendor of the Southeast Asian market before falling out to Apple, Inc. However,
recent scenario of the smartphone market of the most dynamic business sectors of Asia show that
the higher bargaining power of customers and demand for feature high end specs at most
competitive prices is going to be the biggest challenge for Xiaomi in the upcoming years.
According to Guoling and Xiaolin (2012), another threatening scenario is that the smartphone
demand is gradually weakening in the home market of Xiaomi that is China. On the contrary,
with market entry of two more potential brands like Honor from Huawei and RealMe along with
Oppo and Vivo has made the market competition most intense in the domain of budget mobile
phones. The company has also failed to implement the lean production model by means of reach
the targeted to make a market entry in Europe. Without tactful production and proper
manufacturing Cost Management, show me would not be able to offer phones at a competitive
fries like ZTE or Huawei technologies in European market also.
The failure to enter into the European market prompted xiaomi to explore other less feasible
market options like Brazil and India. The company launched to their first phone for Brazil in
2018 and they have indulged in Rapid expansion across Asia, specifically in India which is the
biggest scope for market expansion in Asia for xiaomi. In the future, the sales from home market
will not be able to keep the brand equity or sales parity in a similar position. Hence Steenkamp
(2017), expect that xiaomi would eagerly look forward at the overseas market. Nevertheless Pon,

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Seppälä and Kenney (2014), also we use that xiaomi will take at least 5 to 6 years to establish
their presence outside China. This is because, enjoying the benefit of free corporate trade, they
had to put in very less effort in fostering relationship which distributors, careers, promotional
agent as well as other market stakeholders. However, under stringent local regulations and
largely competitive market presence of various potential brands, Xiaomi will have a hard time to
allocate distributors, foster relationship with mobile carriers and generate their brand value in a
new market. The company will face ample competition from Samsung, Motorola LG and other
latest handset vendors like Oppo and Vivo also.
4. Recommendations and Conclusions
In the first place in the online marketing visible to serve only 28% of customers when new
markets like India. This is why xiaomi needs to drastically plan for entering the offline physical
retail market also. More than 50% smartphone purchasing customers still prefer to buy handset
from physical outlets.
The company also needs to set up new manufacturing plants in the different markets where they
are operating. In the Asian countries, production with local workers and local equipment can
help Xiaomi to reduce their manufacturing and assembly cost. Steenkamp (2017), states that the
recent sales value of xiaomi in India is 1 billion US dollar. They should utilise the market capital
to setup manufacturing plant. This is because 95% of most profitable smartphone sales
campaigns have been successful through local market manufacturing only.
The organisation can also reduce cost of market entry by establishing investment and distribution
tie ups with other companies. Whereas technological collaboration with local companies require

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immediate funding, establishment of tie up for financial and distribution partnership health
accompany to avoid paying the transfer capital and diminish the risk of operations.

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Reference List
Cai, L. (2016). Motivation of Crowds' Online Participation in Crowdsourcing Community: A
case of XIAOMI MIUI.
Chen, Y., Kuo, C. J., Jhan, Y. C., & Chiu, P. N. (2014, July). Hunger marketing on smartphone.
In Proceedings of PICMET'14 Conference: Portland International Center for
Management of Engineering and Technology; Infrastructure and Service Integration (pp.
1950-1957). IEEE.
Glowik, M. (2016). Market Entry Strategies: Internationalization Theories, Concepts and Cases
of Asian High-Technology Firms: Haier, Hon Hai Precision, Lenovo, LG Electronics,
Panasonic, Samsung, Sharp, Sony, TCL, Xiaomi. Walter de Gruyter GmbH & Co KG.
Guoling, Z., & Xiaolin, L. (2012). The Marketing Strategy based on Online Brand Community:
A Case Study on Beijing Xiaomi Science and Technology Co., Ltd.[J]. Enterprise
Vitality, 12.
Gupta, S., & Dhillon, I. (2014). Can Xiaomi shake the global smartphone industry with an
innovative “services-based business model”?. AIMA Journal of Management &
Research, 8(3/4), 2177-97.
Hyun, J. H. (2017). Emerging Multinationals in Emerging Markets: Xiaomi Experience in the
Indian Smartphone Market.
Pon, B., Seppälä, T., & Kenney, M. (2014). Android and the demise of operating system-based
power: Firm strategy and platform control in the post-PC world. Telecommunications
Policy, 38(11), 979-991.

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Rawal, P., Awasthi, A., & Upadhayay, S. (2017). Creating a Hunger Driven Smartphone Market
by Xiaomi. International Journal of Engineering Science, 11250.
Shih, C. C., Lin, T. M., & Luarn, P. (2014). Fan-centric social media: The Xiaomi phenomenon
in China. Business Horizons, 57(3), 349-358.
Steenkamp, J. B. (2017). Global brand strategy: World-wise marketing in the age of branding.
Springer.
Tse, E. (2015). China's disruptors: How Alibaba, Xiaomi, Tencent, and other companies are
changing the rules of business. Penguin.
Xie, W., & Liang, H. (2013, July). A case study: Innovation strategy assessment of the leading
smartphone companies. In 2013 Suzhou-Silicon Valley-Beijing International Innovation
Conference (pp. 121-126). IEEE.