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PUBLISHED : Friday, 21 December, 2012, 3:58pm
UPDATED : Saturday, 22 December, 2012, 8:46am

Xiaomi, Nokia in new web tie-ups

BIO

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young’s China Business Blog (www.youngchinabiz.com), commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.”
 

A couple of tie-ups from the hot smartphone space are making headlines these last few days, with up-and-comer Xiaomi and fast-fading global giant Nokia (Helsinki: NOK1V) both looking to Internet partners to boost their prospects.

The first of the tie-ups will see Xioami partner with leading Internet portal Sina (Nasdaq: SINA) to sell Xiaomi’s second-generation smartphones online. Meantime, Nokia is tying up with Jingdong Mall, China’s second largest e-commerce firm, in a bid to reverse its downward slide in the world's largest mobile market.

From my perspective, both of these tie-ups look like publicity stunts that lack any major substance and are likely to produce limited results. But that said, Xioami in particular has emerged as a master at building strong marketing campaigns around its new product launches and already seems to be getting a lot of attention from this new Sina Weibo tie-up.

Let’s take a look first at Xiaomi, whose new partnership will see it launch its new MI2 smartphones through a promotion over Sina’s wildly popular Weibo microblogging service. Under the promotion, Xiaomi will let Weibo users order 50,000 of its new MI2 phones on December 19 and 20, presumably letting them get their new products before they become available to the broader market. Buyers will be able to get their phones starting December 21.

To repeat what I said above, I don't really see anything very exciting about this promotion, even though it has generated lots of buzz in the Chinese media. Companies do these kinds of exclusive tie-ups all the time to launch new products, and they're mostly just a marketing gimmick. But I have to credit Xiaomi co-founder Jun Lei for again working his marketing magic to make this launch into a much bigger even than it really is. Many of his tactics look much like those used by his idol, Apple (Nasdaq: AAPL), which is also able to manipulate the media to generate big buzz around its product launches.

Xiaomi's choice of Weibo as a partner is also a good one, as the site still enjoys its status as China's most popular microblogging platform, akin to Twitter in the west. Of course many industry watchers have observed that Tencent's (0700.HK) WeChat mobile messaging product is quickly gaining ground on Weibo, which is perhaps one reason why Sina is suddenly embracing any opportunity it can to promote its own Weibo.

Xiaomi may be a relatively good partner for Sina Weibo, but the much bigger prize would be an alliance with e-commerce leader Alibaba, which was reportedly being discussed last month before discussions broke off over terms of the tie-up. More recent reports have indicated that the talks have restarted, and I wouldn't be surprised to see a major new Sina-Alibaba partnership announced next year.

 

Moving on, the second mobile tie-up will see Nokia aim to sell 2 billion yuan, or about US$320 million, worth of its mobile phones over Jingdong Mall's website next year. Nokia will make at least one new model exclusively available online as part of the tie-up, again in a nod to the huge popularity of e-commerce buying in China.

In talking about this new alliance, a Nokia executive said that all of its phones in China will be available for sale both offline and online going forward, though he didn't indicate that the deal with Jingdong would be exclusive. That leads me to my next point, which is that this deal looks to me like a non-event except for the fact that a few media reported on it. Perhaps it was a slow news day, or perhaps any piece of news with Nokia and Jingdong Mall in the headline looks like it should be important.

At the end of the day, I expect nearly all mobile phones are now available for sale online, either directly from the manufacturers or through online electronics shops run by names like Suning and Gome. While Nokia may get a few extra sales from its Jingdong promotion, in the end its longer decline in China and the rest of the world are likely to continue unabated.

Bottom line: New online tie-ups by Xiaomi and Nokia look largely like non-events, though Xiaomi's strong marketing savvy could help bring moderate success to its deal with Sina Weibo.

 

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