Move over Huawei, Xiaomi is China’s new smartphone king
4 min read . Updated: 24 Mar 2021, 10:37 PM IST Gadget maker’s global fortunes revive as tech giant stumbles under a string of blows from the US
HONG KONG—The swift decline in Huawei Technologies Co.’s smartphone business under the weight of U.S. sanctions has left an opening in the market. A different Chinese technology giant is filling the void.
Xiaomi Corp. is the new Chinese smartphone king. Consumers from India to France are snapping up its devices as Huawei sheds customers. Xiaomi was the third-largest smartphone seller in the world toward the end of last year, behind Apple Inc. and South Korea’s Samsung Electronics Co.
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The Beijing company on Wednesday reported soaring sales in multiple regions, including a 57% jump in phone shipments in Western Europe, and a 52% increase in mainland China. Revenue for the year rose by more than one fifth, it said.
“We still have a lot of room to develop," Wang Xiang, Xiaomi’s president, told reporters.
As it has surged, and plotted its future in the realms of 5G, artificial intelligence and internet-connected gadgets, Xiaomi has also drawn scrutiny from U.S. officials. In January, it was slapped with an investment blacklisting by the Department of Defense. Yet unlike Huawei, it has so far succeeded in winning a halt of the ban in a U.S. court.
Crucial to its success has been winning over consumers like Xie Yu, a 29-year-old tech enthusiast from Nanjing, in eastern China. In November, Mr. Xie bought a Xiaomi Mi 10 for 3,299 yuan, equivalent to about $500, to replace a phone made by a rival Chinese brand. The decision came down to the Xiaomi device and Huawei’s flagship phone, the P40. In the end, he found the Mi 10 more cost-effective—and put more trust in the foreign-made chips powering it. Huawei has boosted its reliance on self-developed chips to counter a ban on its access to U.S. suppliers.
“Everyone is talking about supporting ‘made-in-China’ tech, and Huawei did make huge progress and great phones, but when it comes down to real products, you can still feel the difference," he said of his Xiaomi device.
Xiaomi’s resurgence marks a comeback for the Beijing company. Founded in 2010 by the entrepreneur Lei Jun, Xiaomi—pronounced “sheow-me" and meaning millet in Chinese—took only half a decade to surge to the top of China’s smartphone market by selling to China’s rising class of internet-connected consumers. The company’s inexpensive yet sleekly designed gadgets—from phones to internet-connected rice cookers—spread to homes across China, and it made quick inroads into neighboring India.
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In 2018, Xiaomi’s blockbuster Hong Kong public stock offering coincided with a $1.5 billion payday for Mr. Lei. But the rise of Huawei and faster-moving smartphone upstarts such as Oppo and Vivo put the company on the defensive as it lost ground at home and global growth stalled.
Then the U.S. clamped down on Huawei’s supply chain, severing it from smartphone chips and freezing users out of Google’s Android smartphone software. Buyers flocked to other brands—largely to competitively priced rivals whose phones also used Android, including Xiaomi. Huawei’s global smartphone shipments last year plunged 22% last year, as Xiaomi’s rose by 17%, according to research firm Strategy Analytics.
Xiaomi’s biggest strides came in Western Europe and China, where aggressive marketing and an established sales network helped it grab market share from Huawei, analysts said. It has been the No. 1 seller in India for three years in a row. Huawei was still the No. 1 seller within China last quarter, but even there it is losing ground fast.
“Xiaomi has moved in where Huawei has been nudged out," said Neil Mawston, executive director at Strategy Analytics.
A victory for Xiaomi in avoiding Huawei’s fate came this month, when it convinced a Washington, D.C., federal judge to temporarily halt the Trump-era investment ban imposed in January. The ban came after the Pentagon added Xiaomi to a list of Chinese companies suspected of military links. The judge called the Pentagon’s reasoning for blacklisting Xiaomi—which included the fact that Mr. Lei had received a state award in 2019—deeply flawed.
Like Huawei, Xiaomi doesn’t sell smartphones in the U.S., though it does sell some internet-connected gadgets such as electric scooters and air purifiers to American consumers via online channels. Sales of its lower-priced smartphones in markets that Huawei once dominated have been quickest to catch on in the past year, said Neil Shah, vice president of research at Counterpoint Research, a consulting firm.
That includes phones in Xiaomi’s Redmi series, which typically range between $100 and $150, he said. They have been competitive with comparable mass-market devices sold by Huawei, such as its similarly priced Nova and Y series devices.
A challenge for Xiaomi is how much more it can profit from Huawei’s troubles. Unlike Huawei, Xiaomi hasn’t made an aggressive bid for the premium-priced smartphone market dominated by the likes of Apple. It lacks Huawei’s multibillion-dollar research-and-development budget.
Mr. Wang, the Xiaomi executive, suggested the company hasn’t written off Huawei. “Since the birth of Xiaomi in 2010, there have been many competitors all along," he said. “We will respect and treat all competitors seriously."
Raffaele Huang contributed to this article
This story has been published from a wire agency feed without modifications to the text.
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