Xiaomi’s UK launch has been sullied by growing pains, but the company is still looking forward

Xiaomi’s UK launch has been sullied by growing pains, but the company is still looking forward

Despite being the fourth largest smartphone vendor in the world (according to IDC), Xiaomi as a brand is relatively unknown outside of Asia and some parts of Europe. Walking around the streets of London or Dublin, for example, you’d be hard-pressed to find a Xiaomi device in someone’s hand. However, with Xiaomi’s expansion into Europe, and the UK in particular, their phones are becoming more and more commonplace.

Xiaomi is a company revered in India and China for their low-price, high-performance smartphones. They sell their devices at no more than a 5% profit margin, meaning their smartphones are very close in price to bill-of-material. As a result, you get performance akin to that of a flagship from companies such as Samsung, Sony, or any other major OEM, but for a fraction of the price.

That being said, it wasn’t an easy path. The company had a few major marketing blunders, which significantly hindered its expansion.

A calculated move

We reached out to Wilkin Lee, sales and marketing director for Xiaomi UK and Ireland, to discuss the obstacles faced by the team when organising the UK launch, and how they overcame them.

Xiaomi, a brand previously confined to mostly India, China, and e-commerce sites, has recently set its sights on global expansion. The UK and Ireland are among the first European countries into which Xiaomi has expanded. “Europe is a key priority for us in our global expansion and the UK + Ireland plays a pivotal role in this journey. UK + Ireland consumers in particular, are some of the most connected in Europe and also the world, and we believe that they will love both our honestly priced smartphones as well as our connected hardware,” says Wilkin.

Xiaomi’s expansion into the UK came off their incredible success in other EU countries. Their shares in the EU market increased by over 1000% in Q1 of 2018, according to Canalys, thanks to their continued growth in Spain, Romania and France.

But it hasn’t been an easy journey, by any stretch of the imagination. “One of our biggest obstacles when entering the UK + Ireland market is brand awareness – in the UK + Ireland we are a relatively unknown brand by consumers,” says Wilkin.

Xiaomi has made several moves to improve brand awareness. The first UK Mi Store was opened in Westfield Shopping Centre in London last November. In Ireland, the company also partnered with network service provider Three to sell their products in offline stores there. This — in combination with Xiaomi’s online store now offering many of their products in the UK — is an encouraging start in terms of expansion.

Growing pains

Growth, however, has been slow thus far. According to StatCounter, the company has gained less than two percent of the Irish market since launching early in November of last year. We are using the Irish market as a baseline, as there are no statistics for the UK yet, though the markets are generally similar. This is surprising given that the launch went off, by and large, without a hitch. One possible reason for this slow growth is that there is very limited availability of Xiaomi products. The products are only officially sold in Ireland via Three stores. This limits the company’s selling power significantly, as Three employees have mentioned that Xiaomi products are selling out as fast as Three can get them.

People queueing outside of Three Ireland’s store on Grafton Street, Dublin, to receive a free Xiaomi goodie bag.

In the UK, market shares are less clear, but Wilkin says that the Westfield Shopping Centre Mi Store did very well in its opening weekend. “We have been overwhelmed by the initial response. Over the weekend of its opening we had 100s of fans queueing to get a first glimpse of the connected product which saw more than 1,500 customers for its first weekend of trading.” I visited the store myself and there were a few customers floating around, gazing at the various products on display. The store was impressive; the number of customers was not. That being said, I did visit near closing time, so the number of customers I saw is most likely not representative of the store’s daily traffic. On the other hand, I visited the Apple store (also in Westfield Shopping Centre) right after the Mi Store, and it was thronged with customers. Certainly, Apple is a bigger brand in the UK than Xiaomi, but the difference in the number of customers was staggering. This raises questions about just how well the Mi Store is doing.

The biggest mistake so far of Xiaomi’s UK launch was a misleading flash sale. The flash sale marketing technique is one that Xiaomi utilises extensively in China and India to raise their profile. It typically involves certain items going down to extremely low prices. Obviously, supplies are limited, so the products touted in the flash sales typically sold out very very fast. However, when Xiaomi announced that they would be having a UK flash sale to celebrate their launch there, people were expecting a more traditional flash sale in which there are many products available. Xiaomi, however, had a different idea. Only ten phones were made available for the sale, meaning that they sold out instantly. As a result, people were logging on to Xiaomi’s website expecting to land themselves a nice smartphone for £1, only to find that everything was “Sold out.”

The public backlash from this was, understandably, fierce. There were concerns that the terms of the flash sale were unclear, and that there were actually no phones available for £1. Xiaomi, however, released a statement on Twitter clarifying that there were indeed 10 devices sold for £1. That did little to calm the blaze, however, as complaints came rolling in on the company’s Facebook page. One user even claimed that the code on the website was written so that the “Sold out” banner would display as soon as the sale began, without even checking if the phones had been sold.

The Xiaomi flash sale in the UK

Here and now

Disastrous flash sales aside, Xiaomi seems to have every base covered thus far. Wilkin says that expanding into the UK and Irish markets was “the logical next step” in Xiaomi’s global expansion plans. According to him, Xiaomi views the UK as “a very sophisticated and innovative market.” Despite being cautious (Wilkin says they still have a lot to learn from both their consumers and business partners), Xiaomi seems to be reasonably confident in themselves. “In the past eight years, our high-performing and well-priced smartphones, as well as ecosystem products, have raised the standards on performance and quality in the entire industry, contributing significantly to the rise of the mobile internet in China. We are now looking to extend this positive influence to the entire world.

They have good reason to be confident, though. According to Xiaomi’s Q3 earnings report, their international business revenue grew 112.7%  year on year and accounted for 43.9% of total revenue in Q3 2018. What this means is that revenue from countries outside their home country, China, netted them nearly half of their total revenue in Q3 2018. While this is something that you might expect from big companies, it’s important to remember that Xiaomi is less than 10 years old, and only first expanded out of China less than 5 years ago. This is huge growth, so it makes sense that the company is continuing its expansion.

Xiaomi’s growth in China was so exponential, in fact, that they were able to purchase the most expensive domain name in China, mi.com, for $3.6 million within 4 years of being founded.

Looking forward

I asked Wilkin if he had any predictions for the future of the company in the UK and Irish markets. He said that they “definitely want to be one of the important and biggest tech companies in the world, but market share is not the only thing we are striving for.” Xiaomi is already present in 82 markets worldwide and is among the top 5 in thirty of them. While initial statistics — at least for the Irish market — are not exactly impressive, it’s still early days in the company’s growth. It is worth noting as well that the arrival of competitors such as OPPO will make things even more difficult for the company.

Without a doubt, Xiaomi’s biggest obstacle is brand awareness. Once more consumers see the prices Xiaomi sells its devices at, it’s hard to believe that they won’t come flocking to Mi stores. Wilkin says that they do plan to open more stores at some point in the future, though it’s unclear how far down the line that’ll be.

Undoubtedly, Xiaomi will be looking to continue to grow and expand in the UK and Irish markets. The best way to do this will be by innovating and outstripping competitors. Indeed, that seems to be exactly what they have set their sights on doing. The Xiaomi Mi Mix 3 was recently launched in the UK with a 5G edition in the pipeline. While Xiaomi’s smartphones have typically had low prices, 5G support seems to add a few hundred dollars to the asking price, so it’s worth noting that this model will most likely not be cheap.

All in all, the Xiaomi launch in UK and Ireland was successful, but only in some senses of the word. What I mean by that is that there were no major issues with the launch, no delays, nothing like that. However, based on the statistics we have available right now, it doesn’t seem that Xiaomi is doing particularly well in the market. While it could be argued that it is still the early days in their expansion, given the rampant growth Xiaomi has enjoyed in other countries one might be a little disappointed with the results so far.

We have changed how hundreds of millions of people live, and we hope to become a part of the lives of billions of people globally in the future.” -Wilkin Lee

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Jack Price
Jack Price

20-year-old computer science student finding his feet in the world of journalism.