Coming out top in the shipments game is one thing, but winning the respect of competitors and the steadfast loyalty of users is quite another thing, as Chinese smartphone maker Xiaomi is discovering.
Notwithstanding its moniker as “China’s Apple” and despite notching several successes, the Beijing-based firm is beginning to acknowledge that it has miles to go before it gains cachet as a great brand and stand in the company of top global names.
Xioami took just three years to emerge as China’s number one smartphone phone maker by shipment units, beating foreign brands such as Samsung, Apple, LG and HTC as well as homegrown rivals such ZTE and Huawei.
Its business model has been clear: using low prices and limited shipments to gain the attention of consumers and put them in a “fighting for Xiaomi device” game online. The limited phones offered periodically sell out quickly — sometime in less than a minute on online platforms — forcing people to wait another week or so to get a chance again to grab the device.
Such “hunger marketing” strategy has been controversial for Xiaomi in China as well as in some overseas markets. While the marketing tactic has no doubt brought in lot of publicity mileage, with newspapers running stories about how the phones were sold out in a jiffy, it has hurt the Xiaomi brand credibility.
Industry analysts point out that consumers are never sure if Xiaomi phones are available. Interested buyers, for all practical purposes, are forced to participate in a lucky draw, rather than actually make a purchase.
Online users have been complaining about difficulties they face in buying the phones, and there are questions about the actual number of units put up for sale. Last month, Xiaomi came in for some censure from Taiwan authorities after the company admitted that it exaggerated the number of available units for sale in Taiwan.
While Xiaomi became the best-selling smartphone brand in China in the second quarter this year, some observers believe the firm’s marketing tactics may not be reflecting the true picture. There is talk that Xiaomi could be selling more than half of its products via offline retail channels, rather than through its official online store.
Analysts note that with rising brand awareness, Xiaomi has the bargaining power to urge wholesalers to take more stock from the company. That will in turn boost Xioami’s unit shipments figure. Given such speculation, some Chinese netizens have questioned if Xiomi has really beaten Samsung to the top spot. And if it has indeed done that, how was that achieved, they ask.
Chinese users have generally been known for “patriotism”, making them opt for Chinese brands rather than overseas ones. But now dissatisfaction is brewing as people question Xiaomi’s marketing and other tactics. Meanwhile, users have also begun to voice complaints about lack of original ideas in new products.
Take Xioami’s latest offerings, the Mi Pad tablet and the Mi 4 smartphone, as an example. The products are seen as copies of Apple products. The Mi Pad takes reference from Apple’s iPad mini and iPhone 5C devices, while the Mi 4 smartphone has been inspired by Apple’s successful iPhone 4S device in terms of design.
Xioami founder Lei Jun has been known to follow some strategies deployed by Apple founder Steve Jobs in product launches and public presentations. Apple, in fact, seems to be playing a very important role in Xiaomi’s entire corporate culture.
From a business perspective, Xiaomi is undoubtedly a very successful start-up, and the company still has room for further growth. But the core issue for Lei and his team is lack of innovation and original ideas to think out of the box, rather than be “a Chinese version of Apple”.
If Xiaomi can leverage its own capability and resources to build a whole mobile internet ecosystem for Chinese users and compete with Apple, it will win respect from users as well as competitors.
But until the company does that, it will only be known as a follower, instead of being a trendsetter in the highly competitive gadget market.
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