Bangladesh University of Professionals
Term Paper
Challenges of Multinational Companies
Organization: Xiaomi Corporation
Course Name: International Management
Course Code: MGT- 3201
Submitted To:
Dr. Sumayya Begum
Associate Professor
Submitted By
Md. Zahirul Islam
ID: 18241024
Section: B
Department of Management Studies
Bangladesh University of Professionals
30th November 2020
Dr. Sumayya Begum
Associate Professor
Bangladesh University of Professionals
Subject: Submission of Term Paper.
Dear Ma’am,
I am hereby submitting my Term Paper, which is a part of the BBA Program curriculum and
international management course.
This Term Paper is based on, ‘Challenges of Multinational Companies based on Xiaomi
corporation’.
To prepare this report I have collected most relevant information to make this term paper more
logical and reliable. I have tried my best to achieve the objectives of the report and hope that my
effort will serve the purpose.
I will be always available for answering any queries on the paper. Any sort of query or any
criticism on this report will be beneficial for me, as it will give me the opportunity to learn more
and enrich our knowledge. I hope you will consider the mistakes that may take place in the report
in the spite of my best effort.
MD. Zahirul Islam
ID: 18241024
Section: B
Department of Management Studies
Bangladesh University of Professionals
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Abstract
This study aims to explore the challenges of multinational companies which they face in their
business. The paper is covered by secondary data collected from research article,
monographs, cases, and various published materials on the subject. The findings indicated
that new challenges and existing opportunities for MNCs from the government, environment,
Culture, political and legal issue. Overcoming the challenges are one of the most important
issue to get successfully in businesses. This study also covers about the way to overcome
those challenges in new globalization world.
Summary
This study contributes to the existing literature by analyzing conditions of Xiaomi
corporation. From last 10 years Xiaomi doing their business almost all over the world. They
reach 90 countries and have manufacturer plant outside china. All identified challenges and
opportunities along with the hurdles are picked from the concurrent issues in multinational
organization. Thus, the originality comes from logical linking among available factors
behind globalization development scope in the world.
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Table of Content
Title
Page Number
INTRODUCTION
05
OBJECTIVE OF THE STUDY
05
Methodology
06
Limitations
06
Organization Review
07
Xiaomi’s Business Model
08
SWOT Analysis of Xiaomi
09-10
Challenges of Xiaomi Corporation in Host Country
(China)
11
Political, Cultural, and Legal Challenges
12-13
Continent Based Challanges of Xiaomi
14-19
Strategies Xiaomi followed to Overcome all Challenges
20-22
Data Findings
23
Recommendation
23-24
Conclusion
24
References
25
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INTRODUCTION
Multinational company means that a firm that has operations in more than one country,
international sales, and a mix of nationalities among managers and owners. And this
happened because of globalization. Globalization means the process of social, political,
economic, cultural, and technological integration among countries around the world.
Globalization is distinct from internationalization in that internationalization is the process of
a business crossing national and cultural borders, while globalization is the vision of creating
one world unit, a single market entity. Evidence of globalization can be seen in increased
levels of trade, capital flows, and migration. Globalization has been facilitated by
technological advances in transnational communications, transport, and travel. But when a
company want to expend their product or services into the global market, they face so many
challenges to operate their business on other countries. Peoples are different according to
their culture, environment, norms, religion etc. those peoples also have different types of
needs and wants. And counties have their own economic system, political systems,
regulatory issues to handle business. Those information are important for every MNCs to
overcome their challanges and develop their business.
Objective of the Study
The objective of the study is to learn about the opportunities and challenges of global
expansion in this case focusing on the fast-moving high-tech space. So that we should also be
able to analyze the company’s business model and evaluate whether a model that succeeded
domestically would also succeed internationally.
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Methodology
In order to carry on this work and to find out the objectives that will be quantitative in nature,
descriptive research design has been tackled. Relevant and supporting secondary data have
been collected through desk study, including research articles, texts, research monographs,
cases, and various published and unpublished materials on the topic. These data have been
examined in the basics of notable relationship to establish the study more enlightening and
thought stimulating.
Limitations
There are some limitations of this paper. But these limitations represent only the facts that
really hampered the quality of report. I did not have access to all types of recent data. Again,
some site was restricted despite all these limitations, I have given the best of my efforts and
tried to make the report as informative and as comprehensive as possible.
There is high degree of variations in the available market statistics produced by different
sources which often put the report in a dilemma on determining the level of authenticity of
the data collected.
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Organization Review
Introduction of Xiaomi Corporation
Xiaomi Corporation is a Chinese multinational electronics company
founded in April 2010 and headquartered in Beijing. Xiaomi makes and
invests in smartphones, mobile apps, laptops, home appliances, bags,
shoes, consumer electronics, and many other products. Xiaomi is also
the fourth company in the world after Apple, Samsung, and Huawei to
have self-developed mobile phone chip capabilities.
Xiaomi released its first smartphone in August 2011 and rapidly gained market share in China to
become the country's largest smartphone company in 2014. On July 2013 Xiaomi announced
Redmi is a sub-brand owned by Xiaomi. became a separate sub-brand of Xiaomi in 2019 with
entry-level and mid-range devices, while Xiaomi itself produces upper-range and flagship Mi
phones. At the start of second quarter of 2018, Xiaomi was the world's fourth-largest
smartphone manufacturer, leading in both the largest market, China, and the second-largest
market, India. Xiaomi later developed a wider range of consumer electronics, including a smart
home product ecosystem, which has connected more than 100 million smart devices and
appliances. In 2014 Xiaomi announced its expansion outside China, with their first international
headquarters in Singapore. In August 2016 Xiaomi entered Bangladesh via Solar Electro
Bangladesh Limited. In May 2017, Xiaomi opened two MI Home stores: one in Bangalore
(India) and one in Bangladesh. It is the first of several planned for the region.
Xiaomi has 16,700 employees worldwide. It has expanded to other markets including Greater
China, Singapore, Japan, South Korea, Russia, South Africa and most countries and regions in
Southeast Asia and Europe. According to recent reports from the head of Xiaomi Corporation,
India, the company has 7 factories in India and these factories produce more than 99% of Xiaomi
phones in India. While crucial markets like India were consistent, with the company enjoying a
healthy 26% of the market share, it was Europe where Xiaomi saw the maximum amount of
growth. According to a report by Canalys, Xiaomi was the fifth-largest smartphone vendor in
Europe. It managed to ship 5.5 million smartphones in Q3 2019, netting it a 10.5% market share
and placing it right behind Apple, albeit with a wide margin between them.
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Xiaomi’s Business Model
The main reason of this company to be successful is that they are making product with good
features and selling them into an unbelievable law price. The company was launched in 2010
and they have achieved an incredible success in such a short period of time. By 2014 they
were the leading smartphone manufacturer by number of sales in china.
We usually complain about how phone price is going up, but we don’t usually understand the
hidden cost the phone requires before reach to our hand. Companies spend billions just to let
us know that they exist or keep us aware of their latest product. But end of the day we the
consumers have to pay for that. However, Xiaomi has found ways to sell its products at
unbelievable law price. Instead of having multibillion-dollar marketing budget the company
does very little advertising and relies on social media. And to reduce the cost further they
don’t spend opening up stores around the world and hiring thousands of people and sell their
products online directly to customers. By cutting out the middleman the company could
further lower their pieces. Their logic is to build great phones for extremely affordable price
that would simply attract everyone. Xiaomi sells their Smartphone nearly their cost of
production and make 5% profit. But they have a completely different business model. Instead
of making huge profit they sell us the product, they would rather make a profit when we use
the product by selling service, ads and so on. Besides just selling us services Xiaomi sells
like everything. They are selling different types of products like laptops, bags, electronic
scooters, TV etc.
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SWOT Analysis of Xiaomi
 Strengths
One of the biggest Smartphone makers – Xiaomi is one in all the biggest smartphone
manufacturers within the world. it’s aforesaid to be the fifth largest smartphone manufacturer as
of 2017. Originating from China, the Smartphones area unit factory-made in large quantities and
have wide acceptance across the globe.
Highest commercialism Smartphone – The REDMI Note four became the best commercialism
smartphone in Asian country and China and much in five hundredth of the Asian market. This
shows that Xiaomi is powerfully rising within the smartphone market and has already
overwhelmed many giants.
Huge China and Asia market on the market – Another profit to Xiaomi is that the total Asian
market is their playground. As China lies inside Asia and as Chinese mobile brands area unit
extremely penetrated within the Asian markets, Xiaomi still features a ton of ground to explore.
Penetrative rating – Xiaomi has the strongest penetrative rating advantage as a result of it
typically uses marketing techniques and avoids dealer and distributor margins.
 Weaknesses
Offline Distribution – Xiaomi principally sold through the flash sale but generally, it
completely was difficult for patrons to urge their hands on a REDMI or MI model phone. this
may be as a result of their offline distribution is not up to mark and Xiaomi phones sell
principally via E-commerce.
Brand image and Equity – as a result of the advertising and mercantilism efforts unit poor, the
entire image is not so good as Samsung or Apple or various such competitors. the merchandise
portfolio of Xiaomi is in addition restricted that a lot of effects the entire image. Service centers
too unit restricted and each one these factors contribute to the low whole equity and name.
Low Skimming value – whereas various smartphone manufacturers survive on skimming value,
Xiaomi launches its own phones at low prices among the flash sales. As a result, it cannot build
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the foremost of the skimming value or the advantage is not as profitable as a result of it’d be for
Samsung or Apple or various such high-end brands.
 Opportunities
Expansion – Covering the developing countries and also the rising markets ought to be the
priority for Xiaomi. because it principally follows on-line sales model, that is changing into
standard in several countries, it ought to expand to countries wherever E-commerce mode of
purchase is well established or within the method of firm.
Distribution – Besides on-line distribution, Xiaomi conjointly has to consider offline
distribution if it ever needs to be consistent like a number of its prime competitors. Offline
distribution would conjointly mean higher expenses and so an increase in worth. however it’ll
facilitate the complete to form a long image and equity.
Brand Building – complete building ways like ads, Trade promotions, ATL campaigns and BTL
campaigns ought to be launched as frequently as attainable to make a more robust complete
image. Xiaomi is way behind Oppo and Vivo wherever BTL Campaigns area unit involved.
Product Portfolio – Product portfolio of Xiaomi is proscribed and it’s two major series that truly
contribute to the whole revenue of the complete.
 Threats
Competition – Oppo, Vivo, Realme area unit three of the largest competitors for Xiaomi as a
result of their themselves from China and have a similar producing benefit like Xiaomi. Besides
this, Oppo and Vivo have a robust offline presence and have immense distribution network.
Thus, they’re an enormous threat to Xiaomi.
Service – the dearth of service centers cherishes the amount of sales by the complete could be a
worrying datum. Xiaomi has to increase its sales and repair centers each if it needs to retain its
customers.
Brand Differentiation is absent – The smartphone section has become such complete
differentiation is changing into terribly troublesome. every complete is arising with product that
area unit nearly similar, thereby creating it troublesome for the client to decide on one complete
over alternative. this can become particularly troublesome once additional and additional brands
come back from China.
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Challenges of Xiaomi Corporation in Host Country (China)
With the intense development and growth of China's mobile communication and technology
industry, many manufacturers have come up to take the advantage of growing market of mobile
phone users. Approximately 1 billion people own a smartphone. This has led to birth of many of
the world’s famous mobile phone brands. One of the major brands, emerged in 2010 was
Xiaomi. Xiaomi has become one of the most valuable startups from valued currently at US 50
Billion Dollars. It made huge success in the smartphone selling business by implementing mix
market strategies which have proven highly successful in the global as well as domestic markets.
This organization overcome different kind of challenges to become number one brand of their
host country. Some challenges they faced in china are:
 Similar Products: At the beginning of their journey they basically made smartphones just
like providing similar features of Samsung or iPhone. That was their one of the main
weakness on that time. But they overcome this problem vary easily by selling those
smartphones at a law price.
 Durability of Product: As Xiaomi came to the market suddenly and started to make high
features smartphones then the users started to think about is it long lasting or poor-quality
smartphone. But Xiaomi successfully proved that their devices are long lasting and have a
good quality chip capability
 Distribution: At the beginning Xiaomi only sell their product on online platform in China.
But in time they thought that they must reach all over China, and they want to be the number
one smartphone brand in China and then they started to set up MI Store all over the China to
distribute their phones and service.
 Production of different of product: After being successfully become a smartphone brand
Xiaomi started to produce different types of product like laptop, mobile apps, home
appliances, bags, shoes, consumer electronics, and many other products. And the customers
are accepted Xiaomi’s different type of product.
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Political, Cultural, and Legal Challenges
Political, cultural and legal challenges are available in every country. As a smartphone industry
Xiaomi must need to overcome those challenges.
Political: The role of political factors in the context of international business has become
increasingly significant in the 21st century. Higher government and regulatory oversight of
technology firms have made it evident. It was also evident in the Huawei ban that governments
are now highly aggressive in terms of their control of technology firms whether domestic or
foreign. Several more tech businesses like Facebook and Google have also faced significant
problems in overseas markets caused mainly by regulatory issues. The Huawei ban and the
China-US trade wars are also a sign that governments and regulatory agencies are going to play a
more significant role in the area of international business. In the smartphone industry as well, the
level of regulation and political control are growing higher. The trade war between the US and
China is affecting nearly all the large technology firms in the US and China. Just because of
political challenges Xiaomi still struggling to grow their market.
Culture: Cultural differences one of the kye challenges to understanding customers. The
development of cultural dimensions is based on Hofstede’s studies. The idea was to compare
cross-cultural differences. The first Hofstede’s cultural dimension is power distance. It is the
extent to which less powerful people in a society expect and accept that power is distributed
unequally. The second dimension of national culture is uncertainty avoidance. It is the extent to
which people tolerate ambiguity and risk or feel threatened by change. The third dimension is
individualism, as opposed to collectivism. It is the extent to which people are integrated into
tight social networks and act on the basis of their own needs or the needs of their social groups.
The fourth dimension along which national cultures differ systematically is masculinity, with its
opposite pole femininity. According to Hofstede, the duality of sexes is a fundamental fact with
which different societies cope in different ways. The fifth concept that Hofstede found later is
long vs. short-term time orientation, which focuses on the degree the society embraces, or does
not embrace, long-term devotion to traditional values. China has high long-term time orientation
index. Long-term rewards expected as a result of today’s hard work. So the cultural impact is one
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of the key factor to identify the place of business. This is one of the main challenge of Xiaomi to
establish their business.
Legal: Law and legal factors are now of paramount importance in the entire technology industry
for successful global operations. Government control and oversight of technology firms,
including smartphone brands, grew due to several factors. On the one hand, while the growing
influence of tech businesses worldwide is an essential concern for governments, on the other,
emerging concerns like consumer privacy and data security have also given rise to the need for
higher scrutiny. Focusing on compliance is vital for operating successfully in various regions
around the globe. It is why the smartphone companies have dedicated compliance teams that
focus upon complying with local laws in the areas where the business operates as well as
international laws that influence the firm’s business. Some of the standard rules that affect large
and global enterprises include labor laws, product quality laws, environmental laws, and data
security and privacy laws. Patent laws and some other laws also affect smartphone firms.
For the smartphone brands like Xiaomi, it is necessary to comply with these laws to avoid
incurring hefty fines inflicted by the government or regulatory agencies. Apple, among other
leading technology firms in the US, faced an antitrust probe. In a tax-related case in the EU,
Apple paid around $15 billion. The different income tax structures in various regions, as well as
the evolving legal framework in the Asian markets and the US, also give rise to troubles for the
leading tech firms whose size makes them a frequent target of government action.
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Continent Based Challanges of Xiaomi
Asia
After successfully completing the China market Xiaomi started to sell their product globally and
they start with Asian region. Xiaomi targeted Asian developing countries to achieve their goal.
At first, Xiaomi sold smartphones over online or via some corporation but later in May 2017,
Xiaomi opened two MI Home stores: one in Bangalore (India) and one in Bangladesh. It is the
first of several planned for the region. Xiaomi has second-largest market in India and become
much popular in Bangladesh. the company has 7 factories in India and these factories produce
more than 99% of Xiaomi phones in India. On 20 February 2017, Xiaomi officially launched in
Pakistan and brought its Mi and Redmi Note lineup to the country.
In this region Xiaomi faced different kind of challenges, some of them are:
 International Recruiting: As Xiaomi setup factory in India and setup MI store in different
countries in Asia they started to recruit local employees. That was their one of the most important
challenge to recruit right employees to get the desire output.
 Marketing Strategy: As Xiaomi follow a unique marketing strategy to save their cost so that
was their one biggest challenge to do effective marketing in this region. That is why Xiaomi
read the market on this region and they found that some of the Asian countries are
developing vary fast, and peoples are too much connected on internet and social media. So,
they started to make some ad on social media and they successfully manage to attract
customers. Liked by 2.56 million people, the Facebook page of Xiaomi Bangladesh served as
the main social media channel for promotion and public communication. Keeping a pace at
two or three new updates on Facebook each day, the number of ‘likes’ and ‘comments’ is
around 2,000 on average.
 Distribution in Bangladesh: As Xiaomi still not started their local production in
Bangladesh, they are selling their smartphones on online. For online distribution, the
company partnered with local e-commerce platforms DealBazaar and Gadget and Gear to
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manage online services. But they faced some problems regarding this online method and
doing so on May 2017, Xiaomi opened MI Home stores in Bangladesh. For the offline
channel, offline Mi stores and Shwapno outlets are the right places to look into. Among the
64 districts in the country, Mi store covers 58 districts, depicting a complete coverage and
localization in distribution. In addition, the partnership with Shwapno outlets would further
assist in Xiaomi’s in-depth sales throughout the country.
 Tax Issue: Bangladesh government set a huge rate of tax to import mobile and other
electronics devices to attract those MNCs to start local production in this country. So, the
smartphones companies have to pay approximately 57% tax to import their phones. That’s
why Xiaomi only import mid-range smartphones in Bangladesh but still they set the price
vary carefully so that people can be satisfied.
 Local production: As Xiaomi facing the problem with the tax issues the decides to set up
local production. Xiaomi already set up 7 factories in India and these factories produce more
than 99% of Xiaomi phones in India. To boost local production, since 2017 the government
of Bangladesh has been offering some tax benefits to local assemblers and increased import
duties. Though they official announcement that Xiaomi is going to set up its local production
in Bangladesh.
 Competitors: Competitors of Xiaomi like OPPO, vivo, Realme and Samsung, have already
contributed to local manufacturing development. Besides the policy issue, local production
offers great help in smoothing the inventory and sales flow when there is a steep change in
local demand. Xiaomi still lack behind in this part, but they are trying to overcome from it.
 Cultural and Human Resource Challenges: Xiaomi have 18,170 employees all over the
world. In Asian continent peoples follow their culture in their own way and to mange the
human resources Xiaomi face challenges to overcome it. Xiaomi still working on it, try to
analysis to culture to understand employees and their customers.
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Europe
After successfully develop their brand in Asian counties, Xiaomi started to focus on Europe
countries. In September 2016 Xiaomi's smartphones became officially available in the European
Union through their partnership with ABC Data.
Xiaomi initially spread its wings just in Eastern European countries, where money has
traditionally been a bit tighter, and where budget smartphones make good sense. It started in
Poland in September 2016 via a first distributor. Then the company set its sight to the more
mature markets to the west. By November 2017, Xiaomi had put up two stores in Spain. Then
came rapid expansion: 50 stores across Western Europe by end 2018, including flagship stores,
such as the UK store opened in London’s Westfield shopping center in November 2017. Xiaomi
still facing few challanges over there:
 Distribution: Xiaomi set up MI stores over in Europe but those are not enough to cover
those countries. There are still no stores yet in Germany, but official stores did appear in
Rome, Porto, and Bucharest in 2019, while Paris has Xiaomi’s largest store in Europe.
 Local Production: Xiaomi still not started their local production on this continent. Where
other companies already set up factories over there.
 Competition with established Brand: Europe already have three established brand
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Samsung, Huawei, and Apple. Xiaomi still competing with those well-developed brands to
become one of the best brands in Europe. With Huawei floundering in a state of limbo
created by a mix of political maneuvering and obscure national security issues, Xiaomi
appears to sense its opportunity and is putting its foot to the floor. The Beijing-based
company hasn’t been taking on the likes of Apple/Samsung/Huawei at the premium end of
the European market, but don’t rule it out. For now, we see Xiaomi coveting the middlerange market. Its German launch event was, as mentioned, actually for a mid-range device in
the value-focused Redmi sub-brand. That fits where Huawei was previously making
considerable progress in Europe, in large part through Honor. 2020 is poised to be a tough
one, with upstart OEMs like Realme coming in strong. While Huawei’s struggles leave a gap
in the market for all players to grow their market share, Xiaomi will have to ensure it can
offer a range of 5G equipped hardware at multiple price points to make sure it doesn’t lose
out. Additionally, we can expect the company to continue its expansion into new markets
within Europe and beyond.
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Africa
Xiaomi, the China-based smartphone maker is among the leading companies in its home market.
In Asia, the company is dominating the market, dethroning South Korea-based Samsung. Now,
the company is keeping its eyes on Africa. The challenges Xiaomi is facing in this region:
 Disturbing: Xiaomi faced this kind of challenges before in different region and In a new
corporate restructuring, Xiaomi has decided to set up a business headquarters in Africa as the
company is looking to boost its smartphone sales in the region. To boost up sales of its
products in Africa, the company become partner with Jumia Technologies, which is a leading
pan-African e-commerce operator.
 Market Segmentation: Xiaomi face that higher budget smartphones are not much popular in
this region, so they decided to sell Redmi phones as their sub-brand in this region. This brand
only provides mid-range smartphones.
 Sales Strategy: Xiaomi tried to boost their sales by using e-commerce platform but without
offline store they are facing difficulties. Because other brands are selling smartphones by
using offline stores. So, Xiaomi is also expected to deploy an offline sales strategy and will
be granting distribution rights of its handsets in Africa to China-based integrated platform
service provider Shenzhen Keting Digital Technology.
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America
Xiaomi is the fourth-largest seller of smartphones in the world, according to Gartner, behind
Samsung, Apple and Huawei. Its IPO could raise $10 billion, potentially valuing the company at
$100 billion and making it one of the largest IPOs since Alibaba. One of the world’s largest
phone brands is preparing for one of the largest IPOs in years — but it may find it very difficult
to sell its products in the American region. Xiaomi hopes to enter the U.S. one day, according to
comments made to CNBC. Here’s why that won’t be easy.
Xiaomi still not started to selling smartphones in this region, but they are selling electronic
product to monitor the market demand as well. In American region they are facing unavoidably
challenges which make then to think twice before starting their business over there.
 USA phone market: American phone markets are based on some well-known brands like
Apple, Samsung and Huawei. So mid-range smartphones are not going to work in this
region. Peoples of this region already habituated with existing brands.
 Looming trade war with China: There is looming trade war with china with this region
form long time. U.S government already ban so many china’s owned application on their
countries. As long this war will not be finished Xiaomi will not get their freedom to doing
business.
 Extremely hard to establish carrier partnerships: As there is a secret war happening
between America and China no companies are not interested to be the partner to supply
smartphones there.
 Branding: Because of Xiaomi did vary little marketing over last 10 years they sale products
but making a famous brand like Samsung and Apple. Xiaomi isn’t well-known in the United
States. While it has made a name selling good phones at low prices in other markets,
consumers in the U.S. don’t know that yet.
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Strategies Xiaomi followed to Overcome all Challenges
From last 10 years Xiaomi following some strategies to overcome all challenges. So that they
become a successful smartphone industry in the world. The company’s growth is more
remarkable when you see how it does so many things very differently from more established
phone brands. But the case may be that those quirks are Xiaomi’s secrets to success.
Here is Xiaomi’s 10 business strategies which make then success and overcome all challenges:
1. Xiaomi is basically an e-commerce company: Xiaomi co-founder Lei Jun likes to say that
his newest startup is an e-commerce company – which is one of many reasons he dislikes the
frequent comparisons between Xiaomi and Apple. He thinks that likening it to Amazon is
closer to the mark. Xiaomi has its own e-store and also has a storefront on Alibaba’s Tmall.
The numbers back up Lei Jun’s claim. Xiaomi’s website is the third largest business-toconsumer (B2C) ecommerce store in China in terms of sales volume.
Xiaomi generally only sells its devices in limited flash sales – typically in batches of about
50,000 to 100,000 in China, but in smaller amounts overseas – so as to ensure it only
manufactures what it’s sure to sell.
The upstart company’s sales pitch doesn’t stop once someone has bought a smartphone. New
customers will find that their phone comes with a Xiaomi store app pre-installed.
2. Homepage is an e-store: That online commerce focus finds its apotheosis in the
Xiaomi.com website. Most gadget brands use their homepages as showrooms or glorified
online adverts. Xiaomi, however, cuts to the chase by making its home on the web into a pure
ecommerce store. “Xiaomi’s product pages mimic best practices from T-mall,” says Rand
Han, the founder and managing director of Resonance China. Tmall is China’s biggest brandoriented online marketplace, with tens of thousands of vendors such as Uniqlo, Costco, and
Burberry. That makes Xiaomi’s website layout familiar to the hundreds of millions of
shoppers on Tmall and other popular ecommerce sites in China, with the usual tabs to switch
between images, specifications, and buyers’ reviews and ratings.
3. Makes use of a new kind of social commerce: Because Xiaomi largely sells its phones
online, social media is an important part of the way it remains visible and engaged with both
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customers and prospective buyers. It does this in China mainly via Weibo, and in new
markets it’s making use of Facebook, Twitter, and – primarily through Hugo Barra, exGoogler turned Xiaomi VP for international operations – Google+.
4. Every product range has a social hub: Another crucial part of Xiaomi’s social media
strategy is that it runs Weibo accounts for every product range. Xiaomi has 10 main Weibo
accounts, the most popular of which is the Xiaomi Mobile Weibo with close to 11 million
fans; the newest one, for the MiPad (pictured above), has just surpassed 500,000 followers.
Xiaomi’s corporate Weibo has four million followers, indicating that people would rather
interact online with gadgets (so to speak) rather than a company. Gadgets are very personal,
but companies tend to be rather faceless, so this makes sense from a human perspective – yet
it’s something that so few companies do, particularly outside of China.
5. Creates scarcity: Xiaomi’s flash sales help it rein in inventory and reduce wastage, avoiding
the kind of over-production disasters seen recently with Amazon’s Fire Phone and
Microsoft’s Surface RT.
While that makes it harder to get a Xiaomi gadget, the company has managed to spin that
into a positive, creating periodic hype as flash sales of a limited number of devices open up
each week. Xiaomi’s social media accounts, particularly on Weibo and WeChat, play a key
role in driving people to the registration page for each new flash sale.
6. Offline is secondary to online: Xiaomi has 451 national service centers, but they’re not
stores – although they do look rather a lot like Apple’s iconic shops with their pine desks and
lots of space for playing around with the gadgets.
These relatively small shops usually just outside of a city’s main shopping area save Xiaomi
spending on premium retail real estate.
When Xiaomi ventures offline such as with events or its service centers it’s all very much
secondary to its ecommerce core.
7. Lowers the price of “premium”: Xiaomi first emphasizes its low price prior to diving indepth into its flagship product’s high level of integrated technology and hardware
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performance. This combination of low cost and high value is a strong message to Chinese
consumers.
Inspired by Apple, Xiaomi also educates consumers on its design philosophy, emphasizing a
focus on simplicity and functionality in its products.
8. Runs its own community: Along with its careful social media stratagem, Xiaomi is also
pro-active in running its own community forums, or BBS. This is where the brand’s most
hardcore fans, dubbed “Mi fans,” meet to discuss gadgets, share knowledge, and generally
hang out. This is something common to Chinese companies, but largely unused by major
brands overseas.
9. Loyalty program: Lots of supermarkets and quite a few other retailers now have loyalty
programs, but it’s not something that people associate with gadget brands. Xiaomi, however,
has a well-established program under the VIP Users Center part of its BBS.
Being a Xiaomi VIP entails getting points with each new purchase, which counts towards
your status in the Xiaomi online community as well as for discounts on future purchases.
VIPs can also opt into participating in online “missions” and special events offline.
10. Beta access to gadgets: For some gadgets, Xiaomi takes on a limited number of beta users
typically just 500 – who can buy the gadget for RMB 1 (US$0.16) and a few hundred BBS
loyalty points ahead of its official launch. Shortly after Xiaomi teased its MiPad in May,
selected Xiaomi fans got hold of the Android-based tablet a few weeks before it hit Xiaomi’s
online sales.
The strategy here is clear – to build up hype and word-of-mouth advertising in the time it
takes for the first batch of devices to roll off the production lines. It’s usually a period when a
newly revealed gadgets drops off the radars of most gadget enthusiasts, but Xiaomi keeps
people tuned in until the first flash sale is ready for pre-registration.
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Data Findings
The significant part I found when I had prepared this paper that Xiaomi has no quality and
compliance issue regarding anywhere in the world. They always focus on the quality of the
product and give the customer what is called the best product at a reasonable price.
Like any global business, Xiaomi corporation must manage wide-ranging commercial and
competitive pressure to deliver increased financial returns and growth. At the same time, they are
accountable for their employees and have a responsibility towards the workers in their suppliers'
factories and also for the environment.
Within the global business landscape of the smartphone industry, Xiaomi is continually
confronted with a variety of challenges that arise from our commitment to striking the balance
between shareholder interests and the needs and concerns of employees and workers and the
environment, or in short in our aim to become a successful company.
Recommendation
In today’s competitive world, organizations need to use marketing techniques and marketing
expert research to continue their existence. However, the topper forming companies in different
industries attempt to keep their customers and build customer satisfaction: hence, companies and
sellers must follow various management strategies to improve marketing strategy. In the first
stage, Xiaomi must use the entire potential of distribution to inform customers and improve their
awareness of satisfaction and market performance; therefore, increasing distribution is essential.
In the second stage, Xiaomi must use price promotion to raise awareness of satisfaction and
stimulate customers. Particularly, price promotion encourages Xiaomi brand switching and
provides customers incentives to test those smartphones. Xiaomi must do is improve other core
competence for increase the shipments, thus strengthen the bargaining chips with the authorizer.
In long run, Xiaomi Company must emphasis on independent innovation, although this move
will cost a lot of time and money in the initial period, Xiaomi has to do so. Because there are no
well-known companies who do not have their own core technology in the world. Core
technology is the only way that one company must take to develop into a well-known one: To be
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specific, firstly, the company must put emphasis on technological innovation and increase
investment in research. To improve the after-sales service, firstly, set up enough online
communities and forums, direct phone hotlines, ensure consumer advisory and solve the
common problem of Xiaomi phone. Second, set up more direct sales service points and Xiaomi
Home in big and medium sized cities can help to ensure the timely maintenance of Xiaomi
phone; Corporate with local retail outlets in small cities in order to service rural customers and
repair the phone. Then, in order to provide excellent service, Xiaomi has to keep improving
employees' service awareness and carry out a full range of training for repair shop staff to
improve their service quality; service centers should competitive with each other and set up a
range of key performance indicators to ensure the quality of service. Xiaomi Company will set
up online communities, direct sales service points, Xiaomi Home and other localized activity; it
can’t avoid recruiting local people, which will relate to cross-culture management of employee.
Xiaomi must train for overseas employee; explain characteristics and specifications of
company’s culture, but do not force it to accept all. Also requires the management of Xiaomi
Company to actively organize employees from different cultural backgrounds to communicate
effectively within the company.
Conclusion
This study systematically discusses what the problems of Xiaomi company operate in different
region, what cause those problem, presented alternative solutions and recommended solution at
last. In a word, to increase the brand awareness, localize Xiaomi’s core competence in the world
and reliance on mobile internet and social media, in world market. In order to solve the patent
issues. In short run, it can’t avoid paying the license fee. Long-run Xiaomi Company must
emphasis on independent innovation, to improve the after-sales service, firstly, set up enough
online communities and forums, second, set up more direct sales service points and Xiaomi
Home in big and medium sized cities. Above solutions suitable for Xiaomi Company, it also may
be suitable for others China company which wants to expand the world market. There is no
standard method to solve every problem, administrators should take care of it.
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