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Imaginechina
Xiaomi: it’s so much easier at home

Lei Jun, the chief executive of Xiaomi, a fast-growing Chinese smartphone-maker, unveiled his firm’s new “phablets” (in other words, super-sized handsets) today, prompting the usual comparisons with Apple. Minimalist black stage? Check. Crowd of adoring fans? Check. Cryptic invitation meant to build online buzz? Check. In truth, though, Xiaomi’s model is much closer to Amazon’s: sell hardware at low margins and then make money from services and downloads. This works well in China, not least because Google’s services have been blocked by the government, leaving the field clear for domestic firms. But things are harder abroad: in India, its most promising foreign market, Xiaomi faces patent disputes and increasingly capable local rivals. Of the 61m handsets Xiaomi sold last year, only 1m were in India. A new partnership with Bharti Airtel, India’s biggest mobile operator, will help. But building its brand and distribution outside China will be a slog.

Jan 15th 2015
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