Xiaomi taking big steps on the global stage

After taking the lead in the Indian market, Xiaomi has continued the solid progress by snapping up second spot Indonesia, another one of the world’s most lucrative markets.

According to estimates from Counterpoint Research, Xiaomi has collected second place in the market share rankings for second quarter shipments (22%), only trailing behind worldwide leader Samsung (25%). Indonesian smartphone shipments grew 25% annually and 5% sequentially during Q2 2018, partly due to seasonal demands, but also down to the consumer becoming more entwined within the digital economy.

“The overall tech ecosystem in Indonesia is more robust as compared to a year ago,” said Tarun Pathak of Counterpoint Research. “With smartphone users all set to cross the 100 million mark this year, it presents an opportunity for the players in the mobile ecosystem to tap the growing demand of digital consumption. Users have now started migrating from entry level smartphones to mid-tier smartphones which has increased the replacement rate over the past few quarters.”

Xiaomi might have had a bit of a wobble during the end of 2016 and the beginning of 2017, but that looks to be nothing but a distant footnote now. Aside from leading the Indian market for the last two quarters for shipments market share, progress in the Indonesian market provides an excellent foothold in a digital economy which will only go upwards. While other brands are scrapping to capture the minimal profits in the developed markets, the Xiaomi strategy seems to be focus on the areas where smartphone penetration is low. The massive profits might be years down the line, but patient brand-building is a proven strategy.

Offering users entry-level smartphones begins the relationship, and with a broad portfolio of mid-range devices, Xiaomi can take users on a journey to the much hyped digital society. With smartphone penetration increasing, data tariffs becoming cheaper and digital services becoming more prevalent, it won’t be too long before lives are dominated by the small screen. Creating the relationship with the consumer now will serve Xiaomi very well in the long-run.

The success of Xiaomi has been partly put down to the success of the Redmi series through both offline and online channels, allowing it to lead the sub-$150 device segment. This segment still accounts for more than 50% of the overall market, while the $100-$150 sub-segment was the fastest growing price band across the quarter. The price is starting to creep up, which will start to make Indonesia attractive to other brands who operate at the premium end.

Looking at the premium end of the market, Apple currently has less than 1% of the market, though owing to a globally renowned brand increasing this share once the consumer is ready to spend bigger won’t be much of a challenge; there don’t seem to be many markets Apple can’t dominate. Xiaomi is attempting to create a position for itself at the top-end of the scale with the launch of Poco, but it will have considerable work to do to make sure it can compete with the likes of Apple and Samsung at the branding game.

Building the foundations in the developing markets before scaling the customer up through the low- and into the mid-end device portfolio is a sensible way to do business. Xiaomi is making powerful steps on the global stage through gradual relationship building.