Cross border business management: Xiaomi

This report focuses on Xiaomi, a Chinese smartphone company that was established eight years ago which has transformed from a startup to a global player. The report will elaborate on the company overview and discuss some of its major products of the year and its future products too. The paper will also analyze the US market and illustrate a possible scenario outcome if Xiaomi manages to enter the US market. Additionally, the paper will look at the various price strategies employed by the firm which have contributed to its global success as well as Xiaomi bundling with telecom as a competitive strategy over its rivals.

CROSS BORDER BUSINESS MANAGEMENT: XIAOMI
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EXECUTIVE SUMMARY
This report focuses on Xiaomi, a Chinese smartphone company that was established eight years
ago which has transformed from a startup to a global player. Xiaomi is increasingly becoming a
big threat to the major players in the industry; Apple and Samsung. It recently surpassed LG
electronics to be the fifth largest firm globally. The report will elaborate on the company
overview and discuss some of its major products of the year and its future products too. evident
that Xiaomi is heavily reliant of the smartphone division as it accounts for 70% of the firm’s
revenue where 36% account for the international market despite having a limited presence ousted
Asia which will be illustrated in the paper. The paper will also analyze the US market and
illustrate a possible scenario outcome if Xiaomi manages to enter the US market. Additionally,
the paper will look at the various price strategies employed by the firm which have contributed to
its global success as well as Xiaomi bundling with telecom as a competitive strategy over its
rivals

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Table of Contents
CROSS BORDER BUSINESS MANAGEMENT: XIAOMI.........................................................4
1.0 Introduction and Company over view.......................................................................................4
2.0 Current and Future Products......................................................................................................4
2.1Current Products.....................................................................................................................4
2.1.1Xiaomi MiA2...................................................................................................................4
2.1.2 Xiaomi Mi Mix2S...........................................................................................................5
2.1.3 Xiaomi Redmi Note 5 Pro...............................................................................................6
2.1.4 Xiaomi WiFi Router........................................................................................................6
2.1.5 Mi Notebook....................................................................................................................7
2.1.6 Xiaomi Mi Band 2...........................................................................................................7
2.2 Future products......................................................................................................................8
2.2.1 Foldable Xiaomi smartphones.........................................................................................8
2.2.3Xiaomi Mi flagship smartphones.....................................................................................8
3.0 Company Financials..................................................................................................................8
4.0 US Market Analysis...................................................................................................................9
5.0 Xiaomi Pricing Strategies........................................................................................................10
5.1 Economy pricing..................................................................................................................10
5.2 Penetration pricing...............................................................................................................10
5.3 Geographical pricing............................................................................................................10
5.4 Promotional pricing..............................................................................................................10
5.5 Premium Pricing..................................................................................................................10
6.0 Bundling with telecom.............................................................................................................10

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7.0 Conclusion...............................................................................................................................11
8.0 References................................................................................................................................12
List of Figures
Figure 1: Xiaomi MiA2…………………………………………………………………………...6
Figure 2: Xiaomi Mi Mix2S………………………………………………………………………6
Figure 3: Xiaomi Redmi Note 5 Pro………………………………………………………………7
Figure 4: Xiaomi WiFi Router…………………………………………………………………….7
Figure 5: Xiaomi Mi Notebook……………………………………………………………………8
Figure 6: Xiaomi Mi Band 2………………………………………………………………………8
Figure 7: global smartphone markets share from Q4 2008- Q2201………………………………9
Figure 8: The US smartphone market share Q2 2017-Q2 2018…………………………………10

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CROSS BORDER BUSINESS MANAGEMENT: XIAOMI
1.0 Introduction and Company over view
The advancement of technology has largely contributed to the growth and development of
consumer electronics in the past two decades, moreover, it has led to the emergence of firms and
startups which has increased competition in the market leading to the production of quality
products at affordable prices. Such a firm is Xiaomi, it was established by eight partners in 2010
as an electronic technology-based startup through a strategic funding scheme by Temasek (a
Singapore based investment group owned by the Singaporean government) and IDG capitalist
(Chinese venture capitalist firm), (Shirky 2015). Xiaomi’s headquarters are based in Beijing,
China, the firm makes and invests in smartphones, mobile apps, laptops, and related consumer
electronics. However, the firm is largely known through their smartphone and mobile products.
In 2014 Xiaomi was able to shake the smartphone and electronic consumer markets through its
Mi4 flagship device which is considered to be among the best -selling phones in history making
it the largest smartphone maker in China. This remarkable achievement was able to create strong
opportunities such as the endorsement by Qualcomm; the largest electronic chip producer in the
world which provided a strong and strategic footing in the mid-level and high end, mobile phone
consumer markets such as United States, Australia and New Zealand. In less than a decade the
company has gone from being a startup to a global key player placing it as the fifth largest
market share holder globally, in fact many analyst and expert compare Xiaomi to Apple due to
its technological advancements and designs incorporated to their products and many have
predicted that it will soon affect the market share and revenue of the two largest firms globally
Apple and Samsung (Steenkamp 2017,p 50-73).
2.0 Current and Future Products
The Chinese firms' product and service delivery have a strong reputation over the years of
offering cheap and low-quality goods. Xiaomi is strongly rebuking this reputation by offering
quality products at the commendable price range. Despite having a limited presence outside of
Asia, its growth and development in the market has made it the fifth largest vendor in the global
consumer market. It even surpassed Samsung in the Indian market late last year primarily due to
a competitive strategy, where the firm focuses on research and innovation offering quality
products at affordable prices (Jonnalagadd 2018).
2.1Current Products
2.1.1Xiaomi MiA2
The phone was released officially in June this year as a production advancement of the Mi A1
which was the first flagship phone to offer Android one. The 5.99″ MiA2 has a stronger
Snapdragon 660 chipset complimented with a 128GB of internal storage and 6GB of RAM.
However, the main draw to the products is the 12+20MP back camera and 20MP front camera
with an with an LED flash and an AI-assisted mode for taking quality selfies. The phone as a
3000mAh battery which delivers a day’s worth of usage accompanied by a 3.0or 4.0 quick
charger, the price range for the product is $250 -$300.

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Figure 1: Xiaomi MiA2 (Jonnalagadda 2018)
2.1.2 Xiaomi Mi Mix2S
This is the firm’s first flagship phone released in March this year. The phone offers a 5.99” HD
display with a 6GB RAM and 64GB -256GB of internal storage complemented with snapdragon
845 with the global LTE bands. The phone has a dual camera at the back at 12MP and 12MP
camera at the front both accompanied by an LED flash and imaging sensors with AI assistance
Technology of quality HD photos. Currently offers Android 8.0 ore0 but is set to pick up the new
Android releases next year additionally it has a 4000mAh battery which delivers a day’s worth of
heavy usage accompanied with a 3.0or 4.0 quick charger The price tag on the phone ranges from
$400-$600
Figure 2: Xiaomi Mi Mix2S (Black 2018)

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2.1.3 Xiaomi Redmi Note 5 Pro
Released in February this year and has been doing remarkably in the consumer market. The 5.99’
18:9 HD display phone is incorporated with a Snapdragon 636-660 accompanies with a 4GB
RAM and a 32GB-128GB of internal storage. Their rear camera has 12MP+5 MP camera with
an LED flash and front camera with a 20MP with LED selfie light for quality photos. It supports
all the global LTE bands, additionally, it has a 4000mAh battery which delivers a day’s worth of
heavy usage accompanied by a 3.0or 4.0 quick charger. The price of the phone ranges from
$200-$250
Figure 3: Xiaomi Redmi Note 5 Pro (Jonnalagadda 2018)
2.1.4 Xiaomi WiFi Router
Xiaomi currently offers a high-speed router with 128MB, 2.4G/5GHz, 1167Mbps specs only
available in white color.it supports both WDS and WPS with a 802.11 standard s transmission.
The price tag on the products is a mere $40-$50.
Figure 4: Xiaomi WiFi Router (Singh 2018)

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2.1.5 Mi Notebook
The Xiaomi notebook launched in December 2017 has a striking resemblance to the MacBook
Air, however the Mi Notebook is powered an 8th generation quadcore- intel core specifically
powerful enough for consumers who love heavy gaming the price tag on the products ranges
form $1000-$1300 (Puschina et al. 2018)
Figure 5: Xiaomi Mi Notebook (Puschina et al. 2018)
2.1.6 Xiaomi Mi Band 2
The band is made of aluminum and weight a mere 7g it doubles as a passometers, fitness tracker
and a smartwatch compatible with all Xiaomi phones s well as android supported smartphones.
The product has a 70mAh in built battery supported with android 4.4. The price on the product
ranges from $30-$35
Figure 6: Xiaomi Mi Band 2 (Mi.com. 2018)

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2.2 Future products
2.2.1 Foldable Xiaomi smartphones
There is a stiff technology race among smartphone vendor on producing the first foldable or
flexible smartphone before the end of 2019, Samsung and LG seem to be a step ahead with the
unveiling of potential designs and patents. This has led to Xiaomi and Oppo joining hands in the
race where they claim they will be among the first to unveil a working product early next year
(Simons, 2018).
2.2.3Xiaomi Mi flagship smartphones
Smartphone analyst expects 2019 to be a year for success with flagship phones and the
continuation of the Mi brand products such as the Xiaomi Mi max, Mi 7 and Mi 7plus early next
year where it is expected that one of them will be incorporated with the foldable or flexible
technology (Simons, 2018).
3.0 Company Financials
Xiaomi released its 2018 second quarter financial results where it earned a profit of $2.1 billion
dollars which is the first quarter as a publicly traded company. The main contribution to this is
the remarkable sales of the 32 million Xiaomi’s smartphone in a period of three months (April-
June) amounting to a revenue of $4.5 billion. This further illustrates how the firm relies heavily
on the smartphone division which apparently generated two-thirds of the revenue which rose by
68% regardless of the rocky past few months which incurred $1 billion loses mainly due to the
operational cost of the IPO listing in Hong Kong. The firm is now currently valued at
$55.7billion which has surprisingly surpassed LG electronics by 3times its worth. The Q2 results
further reveal that the firm has seen a global growth of 151% on an annual basis where 36% of
the total revenues are from the international markets where it plans to further expand in
European countries increasing its global market share in the long run (Wei and Zhang 2018).
Figure 7: global smartphone markets share from Q4, 2008- Q2 ,2018 (Statista 2018)

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4.0 US Market Analysis
Xiaomi has plans to enter the US market early 2019 where it local rivals Huawei and ZTE
seemed to have failed under the political umbrella of security concerns by the US
government. Apple and Samsung are the major players in the US market occupying more
than 50% of the consumer market (Fan and Yang 2018). This primally because they have
invested heavily in marketing which is contrary opposed to Xiaomi business model where
Figure 8: The US smartphone market share Q2 2017-Q2 2018 (Fan and Yang 2018).
Xiaomi entry into the US market will cause a significant change in the market share, the
success in the UK and India have given a firm a perspective and the need to tailor their
product according to the consumers in a market. Xiaomi understands that us market
consumers value effective software experiences which means they have to cater their MIUI
to the US audience. However, this will be a big threat to Samsung as the firm will produce
high-quality products service delivery at lower prices which consumer will opt for Xiaomi
products. This could result in the firm becoming the second largest smartphone vendor in
the US (Rossignol, 2017).

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5.0 Xiaomi Pricing Strategies
5.1 Economy pricing
Xiaomi employs economy pricing strategically by minimizing the production and operational
cost of its products so as not to overburden the consumers. Additionally, since the whole
business model is based on e-commerce where they sell their products online, market through
social media and carry out other activities online, this plays a major role in effecting the pricing
strategy (Xu 2015).
5.2 Penetration pricing
Xiaomi uses this pricing strategy in entering new markets where they offer quality products at
affordable and attractive prices. This strategy proved to be effective in India and New Zealand
where the firm offered products of similar quality and design to Samsung, Sony and LG. They
would also provide high-quality clones of Apple that Huawei and ZTE (Yu and Zhang 2018).
5.3 Geographical pricing
Xiaomi uses this pricing strategy all over the world, for instance in parts of the world where the
shipping cost may be high or low or where imports are taxed or are given a safe haven, by the
government the final price will translate on the product.
5.4 Promotional pricing
It is largely used by many firms in gaining market share and increasing revenue. Xiaomi
regularly employs this strategy by giving discount and vouchers during mostly during the
launching of their new phones. However, they employ the use of complimentary gifts such as
adding Mi wristband to smartphone purchase (Puschina et al. 2018)
5.5 Premium Pricing
Xiaomi is vested in research and innovations; some products are incorporated with state-of-the-
art technology that came at a high cost. This cost is translated to the price of the final products
since it has a competitive advantage over its rivals and its intended to the high-end consumers.
6.0 Bundling with telecom
incumbent telephone and cable companies have begun to offer their services, such as voice
telephony, Internet and TV in so-called triple play packages (Sujata et al.2015,p 146). This has
been seen as a great opportunity for smartphone vendors to gain a completive advantage over
their rivals by bundling will telecommunication firms. This eradicates the problem where a
smartphone could not work in certain countries since they did not pick the telecommunication
services offered in the region which resulted in jailbreaking od smartphones which was a security
concerned in the long run (Lee and Lee 2018). Xiaomi is known for its flexibility in tailoring its
products to the taste and preferences of the consumers in different regions for the purpose of
growth and development. it has additionally bundled with the major telecommunication in its

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markets such as Airtel India where the relationship even goes further to selling their phone
products in their stores. The possible collaboration with Xiaomi and Verizon in Th US would be
essential in the success of the market entry and domination in the coming years.
7.0 Conclusion
The growth and development of consumer electronics have been contributed heavily be the
technological advancement and the success of its adoption. This has increased competition as
firms continue to emerge and challenge the major players in the industry Apple and Samsung.
Xiaomi went from a startup to a major global layer surpassing LG in just eight years after its
establishment. The report has given the company overview and discussed some of its major
products of the year and its future products too. It is evident from the paper that Xiaomi is
heavily reliant of the smartphone division as it accounts for 70% of the firm’s revenue where
36% account for the international market despite having a limited presence ousted Asia. Xiaomi
Intentions in entering the US market will increase competition in the long run and the major
players: Apple and Samsung will be forced to reduce their prices, however Samsung should be
wary as it faces a threat of losing a majority of its share to Xiaomi due to its effective pricing
strategies and future bundling or collaboration with major telecom services in the region .

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8.0 References
Black, M, 2018. As Xiaomi announces plans for the US, we reveal our pick of its top phones.
[online] Tech Advisor. Available at:
https://www.techadvisor.co.uk/test-centre/mobile-phone/best-xiaomi-phones-2018-3676710/
Fan, Y. and Yang, C., 2018. Competition, product proliferation and welfare: A study of the us
smartphone market. 8(6), pp.14-16.
Jonnalagadda, H. (2018). Best Xiaomi Phones in 2018. [online] Android Central. Available at:
https://www.androidcentral.com/best-xiaomi-phones
Lee, S.B. and Lee, W.H., 2018. AN EMPIRICAL STUDY ON THE EFFECT OF BUNDLING
SERVICE ON USER ACCEPTANCE OF IOT SERVICES. Journal of Theoretical & Applied
Information Technology, 96(6).
Mi.com. 2018. Mi Band - Mi Global Home. [online] Available at:
https://www.mi.com/en/miband/
Puschina, D., Hinum, K. and Bodner, K. ,2018. Xiaomi Mi Notebook Pro (i7-8550U) Laptop
Review. [online] Notebookcheck. Available at: https://www.notebookcheck.net/Xiaomi-Mi-
Notebook-Pro-i7-8550U-Laptop-Review.282620.0.html
Rossignol, J. (2017). Huawei and Xiaomi Could Get Major Boost in United States With AT&T
and Verizon Sales Partnerships. [online] Macrumors.com. Available at:
https://www.macrumors.com/2017/12/15/huawei-xiaomi-att-verizon-talks/
Shirky, C., 2015. Little rice: Smartphones, Xiaomi, and the Chinese dream. New York:
Columbia Global Reports.
SIMONS, H. (2018). Xiaomi tipped to join foldable phone race, but can we expect a cheap
device?. [online] Android Authority. Available at: https://www.androidauthority.com/xiaomi-
oppo-foldable-phone-890623/
Singh, J. 2018. Xiaomi Mi Router 4C With 4 Omni-Directional Antennas Launched. [online]
NDTV Gadgets360.com. Available at: https://gadgets.ndtv.com/laptops/news/xiaomi-mi-router-
4c-announced-in-china-price-features-1891389
Statista 2018. Global smartphone market share 2018 | Statista. [online] Available at:
https://www.statista.com/statistics/271496/global-market-share-held-by-smartphone-vendors-
since-4th-quarter-2009/

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Steenkamp, J.B., 2017. Customer Propositions for Global Brands. In Global Brand Strategy (pp.
45-73). Palgrave Macmillan, London.
Sujata, J., Sohag, S., Tanu, D., Chintan, D., Shubham, P. and Sumit, G., 2015. Impact of over the
top (ott) services on telecom service providers. Indian Journal of Science and Technology, 8(S4),
pp.145-160.
Wei, M.M. and Zhang, F., 2018. Advance Selling to Strategic Consumers: Preorder Contingent
Production Strategy with Advance Selling Target. Production and Operations
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Xu, F., 2015. A Smartphone Challenger’s Competitive Strategy: The Case of Xiaomi. Kindai
management review, 3, pp.90-99.
Yu, L. and Zhang, J., 2018. A two-period pricing model with hunger marketing strategy. Journal
of Modelling in Management, 13(1), pp.81-100.