How Startup Xiaomi Is Besting Giants in Global Smartphone Market
A fledgling, four-year-old electronics brand has quickly become a force for well-established marketers to reckon with, thanks to a potent combination of online flash sales, passionate fans and a cheeky mascot.
Xiaomi just overtook Samsung to become the No.1 smartphone vendor in China in the second quarter, according to research firm Canalys. And it is now the fifth-largest vendor of smartphones worldwide, according to Strategy Analytics. The company, which sells products ranging from smart TVs to a sleek $13 fitness tracker, keeps marketing costs low by counting on fans for social-media PR, and it passes savings on to consumers. During its online flash sales at home and abroad, stock sells out in minutes, sometimes seconds.
About a year ago, Xiaomi hired Amanda Chen, a longtime employee at Yahoo Taiwan (the island's largest internet portal), to head its marketing outside of China. Since then, the "Apple of China" has spread to four new countries in Asia, while keeping its sights on the U.S. for the future. Meanwhile, it changed its brand name to "Mi," more palatable for international consumption than Xiaomi (pronounced shee-yow-mee), which remains the company name.
Yet the company's quick transformation from startup to giant has come at a cost, exposing it to more probing scrutiny. Critics say Xiaomi copies Apple designs and product launches; the company challenges them to try its wares before making accusations. And some Indian fans who tried unsuccessfully to buy phones in flash sales bashed the tactic as a marketing gimmick. Ms. Chen says Xiaomi uses flash sales simply because demand far exceeds supply. Sales jumped 271% in the first half of 2014 compared to the same period a year ago.
Ms. Chen has been named one of Ad Age's Women to Watch China 2014. To read more about this year's honorees, visit here. (This interview has been edited and condensed.)
Ad Age: Xiaomi has said it was targeting entry in 10 international markets in 2014. Is that on track?
Amanda Chen: I haven't seen an annual plan. And I haven't done one either. It all comes in a discussion with the founders, and then we quickly turn it around, make a decision and go execute it. … And then we change it again, we update our plan and see how it goes.
After Singapore, Malaysia, the Philippines and now India, there are six more to go, but we are revising our approach. It's too fast to an extent that we can't really do things as well as we want, in terms of services and operations excellence. So we are slowing down. It may not be 10. So that's one example to show how Xiaomi is a true startup company.
Ad Age: Part of the reason for fans' devotion is that you take their input and suggestions and work them into products. Are you keeping that internationally?
Ms. Chen: Definitely. If a fan says, "Once I remove a folder, can you make it automatically rearrange the desktop?" one of our product managers would take that internally to discuss some ideas and put those proposals back on the forum for users to vote on.
Ad Age: Are you also tapping local fans for marketing?
Ms. Chen: For the India pre-launch program, we actually took the [Mi mascot] bunny and dressed him in Bollywood style. … Because we were running out of designer resources, we asked some of our Mi fans in Singapore and Malaysia and Hong Kong to draw that Mi bunny. So the idea of crowdsourcing for the software, I'm actually using that on marketing too. … For all our events, we never outsource those either. If there are fans who want to help organize an event, why not?
Ad Age: There are reports Google is planning a huge ad buy for its Android One launch in India. Does Xiaomi need an ad buy there?
Ms. Chen: We would still do things the best we could with the resources we have. … By hiring an ad agency or outsourcing to a huge production house, everything would look good. And we do have the cash. But it would be a different company. Because if there are no fans involved, they wouldn't be feeling like they are part of the event.
Ad Age: Globally, do you want to be known as a Chinese brand?
Ms. Chen: We are always going to be a Chinese company. … We should never hide it, but at the same time, we should never amplify that. Because in some markets, such as India or the Philippines, they don't like Chinese, culturally or politically. Even in Taiwan, too. So we should be focusing on what we are really good at. It's the product.
The Women to Watch China questionnaire:
Social-media handle: Writeamanda on Twitter and Instagram
Home city: Taipei
Hobbies: Ashtanga yoga
First job: Leo Burnett in Taipei
Ever lived abroad? In the U.S. for four years, studying journalism with an emphasis in advertising.
If you could have dinner with anyone living or dead, who would it be: Ernest Hemingway.
If you could do it all over again: "I'd want to do what I'm doing right now, earlier."