Xiaomi is making huge buzz lately. It was only last year when it scooped up Android VP Hugo Barra to head its international expansion, and it’s already paying dividends. Here in the Philippines, the social media sphere lights up with every product announcement of Xiaomi, first with the Mi3, followed by the Mi Powerbank and now the Redmi 1S. I’ve never seen any brand, never mind an upstart Chinese brand, gain traction here so quickly.
Sales haven’t matched up to the buzz yet, and pundits have chalked this up to geopolitical tensions, but I surmise that it’s only the matter of Xiaomi’s strict adherence to the online-only model in a premature e-commerce market, especially since the demographic Xiaomi is targeting are those least likely to shop online.
That the Philippines is already the slowest market for Xiaomi is testament to how well its expansion strategy is working so far. It’s also yet another sign that Chinese companies are indeed going global.
THE TRICKS UP XIAOMI’S SLEEVE
The meteoric rise of Xiaomi from its founding in 2010 as Android middleware startup to top phone manufacturer dethroning the likes of Nokia, Apple, and even Samsung in China has been a matter of huge national pride in the middle kingdom. Xiaomi’s founder and CEO Lei Jun is a rockstar. Everyone compares him to Steve Jobs, but the fervor he commands among Mi-fens (a playful pun meaning both Mi fans and rice noodles) arguably goes even beyond Apple’s.
It’s already widely documented that the secret to Xiaomi’s success is its unique cost structure. Weekly online flash sales serve both as an ultra-cheap distribution channel and a great way to generate buzz. Since Xiaomi opts to let the product do all the talking, it doesn’t have to spend much on marketing and distribution. On-demand delivery means it does not need to shoulder inventory costs. It can focus on getting a few products right with its resources mostly freed up for hardware and software R&D.
Contrast this to smartphone market leader Samsung which spends billions on advertising and retail store promotions for its myriad of smartphones. Small wonder that the newly-released Mi4 can outperform Samsung’s flagship S5 even while priced the same as a mid-range Galaxy Ace. The Chinese smartphone maker completely upends the Samsung way. It pioneered an entirely new business model fit for the internet age, lowering costs without compromising on product quality.
Xiaomi’s emergence comes at a time when smartphones are no longer that differentiated, when specs are good enough and parts cheap enough. In this paradigm, low-end tends to win out. Now that Xiaomi has distribution and marketing down pat, it’s focusing on the next big domain: product design. Lei Jun spent almost half the recent Mi4 keynote poring over design details like the rigidity of the metallic frame and the thinness of the screen bezel.
I’ve been using the Mi3 (the previous flagship) for over a month now and I haven’t seen anything low-end about it at all. Some people around me got wind of Xiaomi as a cheap replacement for their secondary phones, only to find out that it’s great even as a primary phone. Battery life is off-the-charts, averaging around five hours of screen time and two to three days of moderate use. The interface is far more refined than the half dozen or so Android handsets I’ve used in the past. It’s second only to Apple in terms of UX polish, and that’s quite an achievement for any 4-year old tech company.
NOT YOUR AVERAGE COPYCAT
There’s an argument to be made that Xiaomi is merely a cheap Apple copycat. The designs do look similar, and many say that the new MIUI 6 is a wholesale ripoff of iOS 7. Even their new Mi4 has almost the exact design language of the recent iPhones.
But Xiaomi is far savvier than the average Apple wannabe. It’s obvious from its product keynotes that it knows exactly what it’s copying and what it’s leaving out. Its products are a mishmash of ideas: Apple’s software design, Samsung’s screen size, Nokia Lumia’s exterior for the Mi3, ZTE’s dual SIM card slots for the Redmi, Moto X’s customizable back covers for the Mi4… but there’s definitely a method behind the madness. This is why Xiaomi is so dangerous. It adopts and discards design philosophies as it sees fit. It also copies far better than its competitors and occasionally even improves upon the original features.
More importantly, Xiaomi is careful where to tread. Its international expansion so far covers mostly emerging markets with weak intellectual property regulations. Coincidentally, these are also the fastest growing smartphone markets in the world. By the time it finally expands to advanced markets, it would already have enough cash to acquire the requisite patents.
EMBLEM OF CHINESE INNOVATION
Xiaomi is the emblem of China’s ongoing transition from nameless factory of the world to branding powerhouse. The company is unabashedly Chinese with its branding, and it is a powerful force in redefining the identity of Chinese innovation: high quality at unbeatably low prices. Nobody does it better, and markets like the Philippines and the rest of Southeast Asia are ideal customers. Other OEMs like Oppo, Meizu, and Oneplus are already enjoying the halo effect cast by Xiaomi across the region.
Another aspect of Chinese innovation Xiaomi represents: grassroots flexibility. Xiaomi builds on the customer-listening habits set by its ‘shanzhai’ (imitation product) forebears, using social media channels to get feedback for upcoming features to be added to its phones. User-designed themes to personalize wallpapers, icons, and even animations form a big part of Xiaomi’s appeal. In contrast to Apple, it presents itself as an approachable company, one that does not lock itself in an ivory tower.
Smartphones are only the beginning, as Xiaomi extends to tablets with the MiPad, televisions with the Mi TV, and even wearables with the Mi Band. It also has a burgeoning accessories business selling Powerbanks, earphones, and even extra buttons. All the products carry its distinct combination of high quality and extreme affordability. Like Apple, Xiaomi has a consistent value proposition across a product portfolio that’s bigger than the sum of its parts.
No matter what the critics say, there’s a huge space in the world for the type of innovation that Xiaomi brings. We have come a long way from the time of the artisans, when only the rich could afford to buy luxuries, and the age of mass production, when the middle class could enjoy modern conveniences. In this connected age, the richest and the poorest share the same apps and the same internet. By eliminating the tradeoff between cost and quality, Xiaomi is well-positioned to democratize technology even further, where the best can now be enjoyed by the masses.
“The future is already here”, proclaimed the famous sci-fi author William Gibson, “It’s just not very evenly distributed.” Here comes Xiaomi, the freight train out of nowhere, on track to steamroll that notion once and for all.