Chinese Smartphone Maker Xiaomi Stakes Its Future on Europe

No. 1 in India and big at home in China, company is testing its formula in more affluent markets

Smartphone maker Xiaomi Corp. shot to success selling stylish but low-cost models in emerging markets, including at home in China.

But can that formula work in the affluent markets of Europe, where Samsung Electronics Co. and Apple Inc. hold sway?

The answer could determine whether Xiaomi is worth the valuation of at least $70 billion that...