The Meteoric Rise of Xiaomi in India

China’s Xiaomi toppled Samsung, Apple, Huawei, and others to record the highest growth rate in smartphone shipments last year. Xiaomi grew a massive 56 percent in 2017, with yearly shipments touching 96 million, according to Counterpoint Research.

Xiaomi is also going global, having expanded to over 60 markets compared to just 40 a quarter ago. It now occupies 6.1 percent of the global market, and has broken into the top five that also includes Samsung, Apple, Huawei and Oppo.

Overall global smartphone shipments touched a record 1.55 billion units in 2017. But, growth has been slow at two percent over 2016’s 1.52 billion units. The top ten smartphone brands now hold 77 percent of the market, leaving the rest for 600-plus brands.  

How did the company grow off of sales of a smartphone sold nearly at production cost? Here are three main ways it went about distributing and building loyalty around its smartphones.

• Ditching brick and mortar. Xiaomi, unlike many smartphone manufacturers, has relied primarily on online sales to push its product. As a result, the company bypassed the cost of building and maintaining venues. In 2012, 72% of all units were sold through online suppliers.
• Flash sales to stoke demand. The company released its smartphones in flash sale shipments of 200,000 or more, further ramping up the hype surrounding release while keeping overstock at a minimum. With phones that stayed on the shelves for longer than average, the company cut long-term deals and forged partnerships with suppliers.
• Building customer loyalty. The company built a fan base through online channels like Weibo (China’s Twitter). Coupled with its strategy to release phones in small batches, Xiaomi relied on these vocal fans to review the new devices and MIUI (Xiaomi’s customized Android OS). The company also drove interest by having engineers dedicated to monitoring and interacting with their consumers.

“India will be a priority market,” said Tarun Pathak, associate director at Counterpoint Research. “There has been a lot of energy spent on making India-centric products, so after the IPO we will see more energy in the India market and that will be not just devices but the ecosystem as a whole. If you have more investment, you can divert it to some of your best-selling countries and sell products which are as per local needs and preferences.”