Xiaomi bets on Mi 6 smartphone to regain its mojo in China

Xiaomi’s Mi 6 is the first smartphone in China running on Qualcomm’s Snapdragon processor

PUBLISHED : Wednesday, 19 April, 2017, 7:33pm
UPDATED : Thursday, 20 April, 2017, 11:10am

Xiaomi, the most valuable Chinese technology startup of 2014, has launched its first smartphone running on Qualcomm Inc’s Snapdragon 835 processor to help it regain its competitive edge and recover the sales lead lost three years ago to upcoming brands Oppo and Vivo.

The company’s new flagship phone, called the Mi 6, will feature 6 GB of RAM, two rear cameras for taking sharper pictures, and will carry a retail price of 2,499 yuan (US$363), almost 50 per cent cheaper than models sold by Apple Inc and Samsung Electronics.

This model is the first to face the market since the January 2017 departure of Hugo Barra -- the former Google vice president and head of Android -- who helped spearhead Xiaomi’s growth from upstart into the 2014 sales leader in the world’s largest smartphone market.

Founded by entrepreneur Lei Jun in 2010, Xiaomi has emulated Apple’s approach of enriching its product range by producing well-designed and finely manufactured electronics from air purifiers to pens and even music players for babies.

“With the highly competitive smartphone market in China, Xiaomi cannot rely on just phones to get rich,” said IDC China’s research manager Jin Di. “It has launched a wide range of products from pens, air purifiers to TVs under its ecosystem. Those products will be the future of Xiaomi business.”

Xiaomi owes its origin to selling well-made phones with high specifications at low prices, using a direct sales method that cuts out dealers and middlemen. For a while, that approach helped deliver smartphones at affordable prices to Chinese consumers, helping it snare market share from Apple and Samsung, albeit at thin profit margins.

“The cost of the phone has jumped significantly, but we still want to provide high-quality products at affordable prices,” said Lei during the Mi 6’s launch in Beijing.

He also turned to exports to fuel Xiaomi’s growth, selling his smartphones in 20 countries. Already, Xiaomi is among the top five smartphone brands in five markets including India, Indonesia and Ukraine.

Lately, his strategy had been squeezed by competitors from two sides. On the low end, local brands Oppo and Vivo used brick-and-mortar sales outlets to endear themselves to customers, while high-end models by Huawei Technologies have lured status-conscious customers away from Xiaomi.

Under siege, Xiaomi’s 2016 shipments slumped 23 per cent and its share of the market was just 8.9 per cent, lagging behind its three main rivals, according to IDC.

Still, Lei has set a 100 billion yuan (US$14.5 billion) revenue target for 2017, and has said that the company’s difficulties are behind it.

Xiaomi targets 10bn yuan revenue from 1,000 new offline stores

The reason for Xiaomi’s slowing business growth in the past two years is because the company had been focused solely on online sales, a strategy that helped the company claimed the top spot in China’s smartphone market, but which left out the majority of customers, Lei said.

“Online retail only accounts for about 10 per cent of the overall retail sales in China,” Lei said. “So many people, who are used to shopping offline, couldn’t get their hands on our products.”

He has set up a goal to have 1,000 so-called MiHome brick-and-mortar retail outlets in China in the next three years, aiming for sales from these stores to top 70 billion yuan annually within five years, he said.

Mi 6, which features a curved glass with a stainless steel bezel, is splash resistant and comes in three colours.The flagship phone will be available in China online and in stores starting on April 28.