China, with its huge and upwardly mobile population, is one of the most prized markets in the world for smartphones.
Samsung has just lost its leading position there to local brand Xiaomi, which models itself on Apple at a fraction of the price. In fact, local smartphone brands now make up four out of the top five in China. The others are Lenovo, Huawei and Yulong.
Xiaomi’s business model is intriguing.
The maker is keeping the price of its phones down while seeking to make money out of apps.
The marketing and distribution model is also unique, as Xiaomi sells the devices online directly to the public.
The phones are released in batches and buyers can make reservations online.
When it was first released in 2012 on Sina Weibo, China’s top microblogging platform, 50,000 units were sold and 1.3 million reservations were received in just five minutes!
The phones are delivered to your front door once you reach the top of the waiting list.
Given low price tags – mine cost 699 yuan or around Bt3,500 – and relatively high quality, it is certainly making waves in the industry. Topping the range is the Mi 3, and, while being extremely affordable, it gives every appearance of being a premium phone and has high-end specifications plus many apps and accessories.
A Xiaomi model is expected to be released in Thailand this year and it is already a sensation in countries like Singapore and India.
After being launched in Singapore only five months ago, it has become the third-most popular brand. In India, the latest release in August of the Mi 3, known as Mi, sold out in 2.4 seconds.
But is the Xiaomi just a one-time hit or is this a sign of rising success in tech innovation from China?
I believe in the latter as other technology companies such as Huawei, Lenovo, Yulong and Tencent are also doing extremely well.
Not only are these hi-tech Chinese companies creating new business models, such as novel forms of distribution, they are also innovating in technology, spending heavily on R&D and scooping up top talent from around the world.
Once again, Xiaomi illustrates this well. Its staff include former employees of Microsoft and Motorola, while president Xin Lin met its vice president Hugo Barra when they both worked for Google.
Barra, a former key executive in Google’s Android division, is leading Xiaomi’s global expansion.
Some say China is starting to reach a critical mass of expertise and talent in IT development.
If so, we may soon see a new leader in the global technology industry.
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