Lower-cost smartphones by Chinese manufacturers such as Xiaomi are gaining popularity
Lower-cost smartphones by Chinese manufacturers such as Xiaomi are gaining popularity

Chinese smartphone maker Xiaomi began its global expansion on Thursday as its popular midrange handsets went on sale in Singapore, the company’s first sales location outside of the greater China region.

Xiaomi, which was valued at $10bn when it raised funding last year, enjoys an Apple-like level of popularity within China. It also caught attention in the US and Europe last year when it poached Hugo Barra, Google’s vice-president for Android product management, to be its vice-president.

Xiaomi stood out from other domestic brands in China not just for hiring high-profile former Google executives, or for the pedigree of its founders.

At a time when competition in the China smartphone market is at its fiercest– handset makers face razor thin margins in a struggle for market share, and low end phones dominate – Xiaomi introduced phones that boasted processors nearly as powerful as those in the latest Apple iPhone and Samsung Galaxy models – but at less than half the price.

“We are targeting the lower and middle part if the pyramid,” Lin Bin, co-founder of Xiaomi who formerly ran Google’s operations in China, told the Financial Times.

Mr Lin said the rapid adoption of smartphones in China is driven by attractive prices of locally produced models, but also the leapfrogging of older technology. China, he said, “moved over land line phones and directly into the mobile phone era.”

Now, he said, smartphones are even supplanting computers, and many Chinese consumers who have never owned a computer will leapfrog directly into smartphones. “Today, we’ve transformed the phone into a computer,” he added.

However, with Chinese smartphone growth starting to slow, even successful producers such as Xiaomi are having to look for alternative sources of growth. This means, in part, seeking to diversify its business.

On Wednesday, the Bank of Beijing announced it would partner with Xiaomi in developing an mobile online payments system. Xiaomi did not comment on the announcement. In addition to its other ventures, Xiaomi last year introduced XiaomiTV, a television set top box designed to connect television to the internet.

It also means expanding internationally, as Xiaomi did on Thursday. The company is seeking to test overseas demand for the brand, a well as its logistics infrastructure before launching next in neighbouring Malaysia. It did not indicate when this might take place.

Bin Lin, president and co-founder of Xiaomi Corp., poses for a portrait with an MiOne smart phone at the company's headquarters in Beijing, China, on Tuesday, Feb. 7, 2012. Xiaomi, a Chinese smartphone vendor that counts Singapore's Temasek Holdings Pte as an investor, is ready to post losses for years as it battles Apple Inc. to attract high-end users to its software. Photographer: Nelson Ching/Bloomberg *** Local Caption *** Bin Lin
Bin Lin, co-founder of Xiaomi

“We’re going to start small then ramp up as quickly as the market wants us to ramp up, in Malaysia and beyond,” Mr Barra told journalists in Singapore.

Xiaomi has no plans to launch in North and Latin America, but is considering India as a market if the launch goes smoothly in Singapore and, eventually in Malaysia.

Still, its phones have started to spread around the world without any marketing push – Mr Lin said they can tell from GPS data that just under 1m of their phones are being used in the US.

Xiaomi does not splurge on logistics, and markets its phones over the internet rather than through agreements with mobile operators. “We like markets which are less controlled by carriers – we sell phones directly to consumers. You just plug in a sim card,” said Mr Lin, who noted that 70 per cent of phones in China are sold free into the market.

Last year Xiaomi sold 18.7m smartphones, a 160 per cent jump from 2012, according to Mr Lin, and had revenues of Rmb31.6bn, up 150 per cent from the previous year. They are ranked seventh by volume in China smartphone sales by Gartner, the research group.

Additional reporting by Zhao Tianqi

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