Apple Inc. and Chinese imitator Xiaomi Inc. are both in the headlines, as the former continues to consolidate its position in China at the expense of the fading latter.
Apple’s continuing China surge is reflected in new remarks from chief executive Tim Cook, who says his company’s business has remained strong in China during the summer months despite concerns of a slowdown linked to the country’s tanking stock markets.
While Apple has been feasting on China, Xiaomi is feeling growing pressure at home and is looking to other markets for growth as it struggles to meet the lofty expectations it set for itself.
According to the latest headlines, the latest stop on Xiaomi’s global roadmap is Africa, where the company is eyeing another BRICS country in South Africa.
Such a move would put Xiaomi in four of the five BRICS, following its earlier moves into India and Brazil.
When the history books are written, some may look at Apple and Xiaomi as the story of a global powerhouse and a Chinese challenger that tried but couldn’t quite succeed.
Of course, everyone would prefer a David-and-Goliath story in which a tiny challenger like Xiaomi rises to defeat a global giant like Apple.
But Apple is showing that Xiaomi is a clearly inferior rival, both in terms of products and marketing strategy.
Apple reported 87 percent growth for its iPhone sales in China during its latest reporting quarter, or nearly triple the rate for Xiaomi’s global growth during the comparable period.
Those rates marked a sharp reversal for trends the previous year, when Beijing-based Xiaomi was posting triple-digit growth and some were predicting it could pose a serious challenge to its much older and highly respected rival.
The latest Apple headline is relatively straightforward, quoting Cook saying simply that the company’s China iPhone sales were strong in July and August.
Cook said iPhone activations in China had accelerated over the last few weeks and that Apple’s Chinese App Store had posted its best-ever performance of the year over the last two weeks.
His comments come as many worry that China’s tanking stock markets could put a damper on broader consumer spending.
Chinese stocks dropped more than 10 percent last week, and their downward plunge was showing no signs of easing this week.
That volatility is already taking a toll on sales for more expensive items, like cars.
But so far it hasn’t affected smartphones, and other recent trends have shown that many Chinese consumers are trading up to more expensive smartphones for their second purchases.
Xiaomi is emerging as one of the clear losers in the trading-up phenomenon, as consumers abandon its phones for higher-priced models from Apple and the fast-rising Huawei.
Xiaomi’s rise in previous years was largely due to a cool and trendy image it carefully cultivated through a savvy combination of hunger marketing using online channels that targeted young people.
But the quality of its products has disappointed many, leading it to abandon the online-only model and look abroad to maintain its growth.
The latest reports say the next stop for Xiaomi will be Africa, where the company will launch its low-end Redmi 2 for about US$160, and its higher-end Mi 4 for about US$320 as soon as next month.
The reports say Xiaomi will work in Africa through a local distributor called Mobile in Africa, which has a strong presence in sub-Sahara Africa.
Africa’s smartphone market posted 66 percent growth in this year’s first quarter, in sharp contrast to China’s smartphone market, which has recently started to contract after several years of strong growth.
Of course it’s also worth pointing out that only 36 million cellphones were sold in all of Africa in the first quarter. In China, about 100 million smartphones are being shipped each quarter.
It would be inaccurate to characterize Xiaomi’s move into Africa as desperate, since the company has been saying for a while that it will expand into other emerging markets this year after launching in Singapore and India last year.
But it’s quickly finding fierce competition in many of these markets, and the decision to abandon its earlier marketing model is quickly erasing the cool and trendy image that helped propel Xiaomi to its early success.
Bottom line: Apple will continue to post strong iPhone growth in China but could lose some momentum if the stock market sell-off continues, while Xiaomi’s new push into Africa won’t offset its own rapidly slowing momentum.
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