Why did Xiaomi take the second place in the world?

Why did Xiaomi only catch the extra points brought by the epidemic?

Why did Xiaomi take the second place in the world?

Why did Xiaomi only catch the extra points brought by the epidemic ?

In the past year, the biggest variables in the global mobile phone market were Huawei and Xiaomi.

July 15, market research firm Canalys Research issued a report for the second quarter, of which the most attention is the millet shipments surge 83% year on year, to overtake Apple fruit to the world’s second, but due to the high-end Huawei Chips are difficult to supply, and sales have fallen from No. 1 in the world to No. 6 in the world.

In fact, growth has already begun. Since the outbreak of the new crown epidemic in early 2020, the overseas market has been the engine of Xiaomi’s growth. Of 83% of the surge in shipments, 70% of it came from overseas. In particular, Latin America, Africa, and Western Europe have contributed 300%, 150% and 50% of the growth rate respectively.

The rapid growth of Xiaomi overseas is inseparable from the impact of Huawei’s sanctions. In addition, the epidemic has reshaped people’s lifestyles and consumption patterns in some countries, creating a rigid demand for smartphones. However, why did Xiaomi seize the same opportunity? Instead of other mobile phone brands?

Why did Xiaomi take the second place in the world?

Canalys report shows that Xiaomi’s global market share of mobile phones has risen to the second place|Canalys

Why Xiaomi?

Since August 17, 2020, Huawei has been completely restricted by the U.S. government. Since then, it has no way to use Google ‘s Android system, and there is no high-end chip available. It is difficult to ship and sales fell sharply. Samsung, Apple, Xiaomi, vivo, and OPPO have more or less taken over Huawei’s share.

“It is one-sided to say that Huawei’s departure has led to Xiaomi’s growth,” Nicole, Vice President of Global Mobility at Canalys, told Geek Park (id: geekpark), “Operators that have worked with Huawei do not only choose Xiaomi. The relationship between Samsung, Apple and other brands and local operators has always been very stable. For any channel, eggs will not be put in the same basket.”

The global growth in demand for smartphones must start from the earlier outbreak of the new crown epidemic.

First, the epidemic has spread the use of low-cost smartphones in emerging Internet markets. In this regard, domestic consumers’ perceptions are not as profound as those abroad. Although the domestic epidemic has been brought under control a long time ago, overseas, most areas are still in the “shadow” of the new crown. For example, in Indonesia, the world’s fourth most populous country, highly infectious mutated strains of the new crown virus are still raging. As of July 17, more than 50,000 people have been diagnosed in the area for 4 consecutive days.

Especially in the field of education, Nicole observed, “Many children in Indonesia are using large-screen smartphones in online lessons, because computers are too expensive for them, and the computers need to be connected to WiFi, and the locals do not have the conditions to install WiFi in their homes. “Some children will take their mobile phones to the Muslim temples to attend classes, because the WiFi there is free for students.

Similar to Indonesia, there are emerging Internet markets with underdeveloped economies such as Latin America and Africa. The demand for using mobile phones for class and office due to the epidemic has contributed to a large part of the sales of low-priced mobile phones.

Second, the epidemic has caused some consumers to face “consumption degradation.” Even in a market that is in the “consumption upgrade” stage, the people still need low-cost, cost-effective mobile phones. In Brazil, installment shopping accounts for about 80% of the total transaction volume. The epidemic situation abroad has not been effectively controlled for a long time. “The epidemic has hit everyone’s income. If you have a job, you have no job. If you can afford to spend more than US$200, you have to choose the one below US$200. The epidemic has changed. Consumption habits. For example, India, which is supposed to be in a consumption upgrade period, is also facing a “downgrade.”

In this regard, Apple has always been firmly in the high-end market, and its products do not match the demand that emphasizes cost-effectiveness. “The epidemic has not changed the main consumers of high-end devices to a great extent. White-collar workers should still go to work, and their income will not decrease.” This is also one of the reasons why Apple was overtaken this time.

And the low-end and mid-priced products are precisely where Xiaomi’s strengths lie. According to data, in the second quarter of 2019, Xiaomi sold 4.3 million units in Europe, with a market share of 9.6%, ranking fourth; after the outbreak began, in the second quarter of 2020, Xiaomi’s sales in Europe reached 7.1 million units, with a market share of 17. %, ranking third, with a year-on-year increase of 65%; in the first quarter of 2021, Xiaomi’s market share in Europe was 22.7%, ranking second, and in the second quarter of 2021, it increased by 50% year-on-year.

Among them, the main force of Xiaomi’s siege of the city is the lower-priced Redmi (Redmi) mobile phone, which accounts for about 70% of Xiaomi’s overall shipments. Compared with Samsung and Apple, the average selling price of Xiaomi mobile phones is about 40% and 75% cheaper, respectively.

Why did Xiaomi take the second place in the world?

Redmi’s main price-performance ratio is in line with the consumer psychology of foreign users “consumption degradation”|Xiaomi

Third, although the epidemic has further released the demand for low- and medium-priced mobile phones in Europe, America, Africa, Southeast Asia and other regions, whether mobile phone manufacturers can meet this huge demand is the key. Obviously, this part of the market is mainly captured by Xiaomi, not vivo, OPPO, Samsung, etc. To be able to win this battle, you need to plan at least one year in advance.

The Internet process overseas is different from China. In Latin America, dominated by Brazil, Mexico, and Colombia, the scale of e-commerce only accounts for 4.4% of total retail sales, while China is currently close to 30%. The express delivery that locals can accept is within 20-40 days, which is unacceptable in China.

Many markets have relied mainly on offline channels in the past. However, the epidemic has caused many offline stores to close for a long time, and people have to start buying mobile phones online. Mobile phone manufacturers and stores must transform online sales, which gives Xiaomi an opportunity.

“Xiaomi’s business model has great advantages under the epidemic. Its organizational structure is lean, efficiency is king, and the response is fast.” Nicole said that when the epidemic first began, she had communicated with Xiaomi’s senior executive Zhou Shouzi. The other party promised that they would assist offline retailers to switch online, and the conversion was completed in only six weeks.

In fact, Xiaomi started to deploy online retail overseas very early. From entering the Indian market in 2014 to opening up the European market in 2017, Xiaomi has made a lot of efforts in online e-commerce, operators and other channels. In contrast, OPPO did not set up its Western European headquarters until early 2020. “The construction of online channels can’t be done in one or two weeks. It may take one or two quarters. The sales result is the performance of the later stage, and the preparation is for the previous year.” Nicole said.

Therefore, when the epidemic comes, Xiaomi’s faster transformation efficiency and the layout that it started earlier will be able to surpass its opponents and take over the low-end consumer demand.

Why did Xiaomi take the second place in the world?

Lei Jun releases high-end Mi 11 series mobile phones|Xiaomi

Next, the harder challenge

Like domestically, Xiaomi also plays the role of a “destroyer” in overseas markets.

“The mobile phone market has two parts, one is stock and the other is incremental. In some mature stock markets, such as Europe and the United States, the development trajectory of mature markets is similar. Come in in a style, and there will be opportunities.”

The “cost-effectiveness” and the use of online channels are Xiaomi’s important “destructive” methods.

However, although the shipment volume has been promoted to the second place, it cannot be said that Xiaomi’s strength and status have reached the second place. According to the statistics of Counterpoint Research, a market research company, in 2018, Apple obtained 73% of the global mobile phone market’s profits, and Samsung received 13% of the profits. The two companies shared nearly 90% of the global mobile phone market’s profits.

“The epidemic has little impact on mid-to-high-end demand. This part of the mid-to-high-end demand that Huawei vacated was mainly undertaken by Samsung and Apple.” Nicole judged.

Domestic manufacturers have no way to shake the position of Samsung and Apple in the high-end market. Xiaomi will set a price of 3,000 yuan or 300 euros or more of high-end mobile phones in 2020, and global sales will be close to 10 million units. But looking at the iPhone, in the fourth quarter of 2020, 18 million units were sold in China alone. The gap is huge.

No one wants to hit the high end. But high prices do not mean high-end, but rely on investment in core technology.

Xiaomi launched its first mobile phone in 2011. In 2020, Xiaomi launched its high-end flagship mobile phones Mi 10 and Mi 11, and only then began to make an impact on the high-end, increasing investment in key technologies such as chips, influence, and fast charging. In contrast, Samsung Electronics was founded in 1969, Apple was founded in 1976, and Huawei was founded in 1987. Xiaomi still has a long way to go if it wants to achieve catch-up in its technological accumulation. If you want to hit the high-end, Xiaomi has to pay more in technology research and development.

Lei Jun also admitted, “We are still young, and accumulation is far from enough. We must remain calm.”

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/why-did-xiaomi-take-the-second-place-in-the-world/
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