Author(s): Ben Wood
At a launch event held in London yesterday and attended by CCS Insight, Xiaomi announced the UK as the fourth European country where it's setting up shop. This follows the company's entry into Spain, France and Italy, where its products are already available.
Xiaomi is one player in a group of fast-growing Chinese smartphone makers that are rapidly targeting global expansion (see Xiaomi Rekindles Global Ambitions). This latest move builds on Xiaomi's already strong position in its home market as well as in other large countries including India, where it's the number-one smartphone maker by sales volume, and Indonesia, where it holds the second spot with an estimated 25 percent market share.
Expanding to the UK is a bold move. This is one of the world's most competitive markets for mobile devices and has always been a magnet for aspiring brands wanting to establish themselves in Europe. In many cases, such efforts haven't had a happy ending. The UK differs to the other European markets in which Xiaomi is already present. British consumers have historically been relatively conservative when it comes to brands, typically gravitating toward those they recognize, rather than taking a risk on a name they've never heard of. Furthermore, unlike Spain and Italy, where consumers will often purchase outright at full price, many UK customers have traditionally bought smartphones that are subsidized with a contract from a mobile network operator.
However, these dynamics are changing. Xiaomi is lucky that it can piggyback on the work that Huawei — and OnePlus — have done to convince customers that it's worth buying a smartphone from a Chinese brand they don't necessarily know. Those that have taken the plunge have been pleasantly surprised by how good the products are and the good value they represent.
Xiaomi is now betting that in this environment its punchy pricing and sheer product breadth will appeal to UK consumers. There was an audible gasp at the event when it announced that its flagship Mi 8 Pro smartphone will cost £499 (ironically that was in direct contrast to the gasp that Huawei drew when it unveiled its Mate 20 Pro with an £899 price tag). Xiaomi is clearly upping the ante, with specifications that aren't dissimilar from Samsung's Galaxy S9+, which costs £869, and Huawei's P20 Pro, priced at £799. Samsung has been feeling competitive pressure from Huawei for some time, and now it's Huawei's turn to feel pressure, albeit from Xiaomi.
But Xiaomi's launch event wasn't just about smartphones. It also announced its fitness tracker Mi Band 3 will cost just £27, and that the first 10,000 units will be discounted to £20. This is an order of magnitude cheaper than Fitbit's Charge 3 tracker, which is priced at £130 and arguably boasts better specifications. However, whether consumers believe Fitbit's product is more than £100 better than Xiaomi's remains to be seen.
These are just two of dozens of products Xiaomi will offer. Priced at £399, the Mi Electric Scooter challenges Micro Scooters, the market leader in this space, whose entry-level vehicle costs £999. It should be noted that such electric scooters aren't legal on public roads or pavements in the UK but that doesn't seem to stop people from riding them.
In fact, a whole array of very competitively priced products ranging from electric toothbrushes to kettles, battery packs, desk lamps, Bluetooth speakers and more will be available at Xiaomi's new retail store at Westfield London and through a dedicated UK shopping portal on its website. A subset of products will also be available at retailers such as John Lewis, Argos and Currys PC World. Xiaomi claims to have investments in more than 100 companies that are already selling — or will soon sell — over 1,600 different products under the Xiaomi brand.
In fairness, it's easy to get swept up in the excitement of a launch event and, compared with most consumers, I'm already very familiar with Xiaomi and its Mi-branded products. But I'm also very intrigued to see how it gets on in the UK. The company's track record shows that it's a disruptive force in every market it enters. It will be interesting to see how UK consumers react to its arrival, and whether it's a market too far as has been the case for other companies in the past. I've got a feeling Xiaomi might surprise a few people.