Analysts see Li Ning’s struggles as indicative of growth challenges facing other Chinese groups, such as smartphone maker Xiaomi

Xiaomi is targeting Brazil for its first smartphone launch outside Asia, amid signs of a slowdown in its home market of China.

The five-year-old company, which was valued at $45bn in a funding round late last year, will sell its Redmi 2 device in Brazil from next week for R$499 ($160), which Xiaomi said was up to half the price of comparable smartphones from rivals such as Samsung and Motorola.

Hugo Barra, the former Google Android executive who now leads Xiaomi’s global expansion, announced the launch in a São Paulo shopping mall.

“Brazil is the fourth largest smartphone market in the world,” he said. “It is also a stepping stone in to Latin America for us.”

This online community has been vital to Xiaomi’s growth in Asia, where it sold more than 60m smartphones last year. Xiaomi relies on word-of-mouth marketing via social media and online-only sales for distribution, which helps to keep its costs low.

But because of Brazil’s high import duties, Xiaomi is working with Foxconn to assemble the Redmi phone locally, as well as source some components such as batteries from within the country.

“Like other developing markets, our value proposition and business model are perfectly suited [to Brazil]: we sell high-quality products at very aggressive prices,” Mr Barra said. “We are heavily focused on ecommerce, people here are very used to buying things online. At this point in time, because of the economic downturn, it makes it a uniquely interesting moment for us to enter.”

While Xiaomi plans to focus its smartphone sales on a small number of large, fast-growing markets for now, analysts say that international expansion is also crucial if Xiaomi is to meet its target of 100m smartphone sales this year.

“They are certainly seeing some slowdown in China,” said Ben Bajarin, analyst at Creative Strategies, pointing to quarterly declines in the past six months. “Brazil and India are the two markets they want to be aggressive in. Their growth is really dependent on their success in those markets.”

While Huawei and Samsung remain strong competitors in the Chinese mid-market where Xiaomi operates, the resurgence of Apple’s iPhone in China is “wreaking havoc” on other smartphone makers, Mr Bajarin said.

Mr Barra said that Xiaomi was still seeing “extremely healthy growth” in China.

In Brazil, the 4.7-inch Redmi 2 will primarily go up against devices by Samsung and local company Blu.

After the Brazilian launch, on Wednesday morning in China, Xiaomi also revealed the appointment of a new chief finance officer. Shou Zi Chew joins after serving as a partner at DST, the investment fund led by Yuri Milner that has backed Facebook, Twitter and Airbnb as well as Xiaomi itself.

“Shou Zi was a successful investor with unique investment insights and financial skills, who recognised Xiaomi’s value early on and helped DST complete its investment in the company,” said Lei Jun, Xiaomi’s chief executive.

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