The purpose of this report is to analyze the case study “Xiaomi: Entering international markets” where the report will analyze why should Xiaomi should enter into the international market, especially in Hong Kong, Taiwan, India, and region South Asia. Thus, this report will analyze how the company enters into the international market and what entry mode they use with identifying the advantages and disadvantages of the modes. It identifies what strategy should be chosen by Jun Lei.
Xiaomi Is a Chinese Multinational Organization That Mainly Sells Smartphones And Digital Products Across World Were The Primary Products Company Are Smartphones, MIUI based devices, laptops, smartphone devices, digital watches, and many more which ensures that the company has a wide range of opportunities for their customers (Yang, Ma, & Chattopadhyay, 2021). The international market will provide a wide range of opportunities for the company by attracting a wide range of customers to buy the products of the company at low price with the high cost of performance (Bedford, 2022). After competing and winning with rival firm Samsung the market of China, India, Hong Kong, and South Asia are some of the most crowded countries in the region of South Asia where the country has a wide range of young people so it is an attractive market for the company. The market of India is full of the demand of cheap and quality smartphones so it provides an opportunity for the company (Tabassum & Ahmed, 2020). The evaluation of the market situation is mainly focused on three major factors such as the total number of young people in the population, rapid growth of e-commerce in the market, and highly skilled workforce for the work regulation. The primary reason behind entering into the international market is that Lin identifies decrement in the sales of the company where the sales volume is increased through emphasizing the Indian and Southeast Asian region because they have a wide range of potential customers.
Xiaomi enters the international market through analyzing the intend of the market with rapid increment to accelerate the development and achievement of the dream of internalization of the vision of Jun Lei (Hyun, 2018). In the year 2014, Xiaomi decides to enter the international market in countries such as Singapore, the Philippines, India, and the South Asia region by launching the website of the company in the countries which is incorporated with different types of local e-platforms (Firstpost, 2015). Xiaomi is incorporated with international e-commerce platforms such as Flipkart, Snapdeal, Amazon to sell the products of the company in an effective price method (Aulakh, 2015). The company established an overseas service team where the focus of the company is to outsource after the sales services with the local companies existed in the market. To cover the international market Xiaomi formulates an international team into the overseas market where the seven-team members out of eight are a member of companies like Google, Tencent, and Qualcomm. Xiaomi established the popularity of credit cards in the region of southeast Asia to provide the products of the company at low prices with attracting a wide range of customers (Cul, Zhao, Aziz, & Xiao, 2017). Xiaomi deals with Lazada group in the region of South East Asia where Lazada develops a large giant warehouse for the company in the countries and established an international transportation team for the company with allowing the electronic payment system.
Xiaomi enters into the market by selecting the online medium and aims on sell the items through partnering with local e-commerce partners and websites where they enter with the medium of contractual agreement mode (Banerji, 2019).
The entry mode to enter in a new market is related with analyzing the trends in the market where Xiaomi enters into the market by adopting the contractual model for gaining an advantage in the market (Wei & Long, 2021). The model is adopted by the company with developing the partnership with the local organizations to create a market for the company in a franchising manner. The advantage for Xiaomi is that it provides a base for the company and the disadvantage is that the success of the company is based on the market image of the existed company. Xiaomi is associated with more than 10 agencies were in India company with developing the 35,000 Gionee retail stores (Cul, Zhao, Aziz, & Xiao, 2017).
Export mode of entry is related to the sale of the products in foreign countries which has been sourcing from the home country where the primary advantage for the company is that it eliminates the risk of establishing the operations in the new country and disadvantage is that it increases the cost of transporting the goods for the company.
Foreign direct investment is an entry mode method in which the companies undertake through direct investment in the country with several mediums such as joint venture, merger, and acquisition (Cul, Zhao, Aziz, & Xiao, 2017). The primary advantage is that it provides a developed market for the company into the new market whereas the disadvantage is that it develops the economic non-viability for the company Xiaomi.
Jun Lei is the Chief executing officer of the company where Lei adopts the strategy of developing the action for the expansion of the company into the market of South East region. The strategy of Jon Lei is to formulate the website, operations, business, and logistics for the company to develop the market for the company into the new region and establish the partnership with the local companies (Cul, Zhao, Aziz, & Xiao, 2017). The concern of Jon Lei is to develop the peripheral hardware with allowing the partners for the company where the strategy of Jun Lei is based on to pull in more revenue through increasing the operations into the new market. The strategy which has been adopted by Jun Lei is based on franchising with local firms of those countries in which the company wants to enter. The recommendation for Jun Lei is to incorporate with local partners in the market to gain competitive advantage over the competitors (Wei & Long, 2021).
Conclusion
Based on the above study it is concluded that new markets like Taiwan, Hong Kong, and India are a wide market where the company targets youth people and Xiaomi adopts online mode for entering into the market. Xiaomi incorporates local firms into the market for selling the product where the company adopts the mode of contractual mode. The Lei should choose the strategy to improve the franchising with the local firms.
References
Aulakh, G. (2015). Xiaomi ropes in Amazon, Snapdeal; ends exclusive tie-up with Flipkart. https://economictimes.indiatimes.com/tech/hardware/xiaomi-ropes-in-amazon-snapdeal-ends-exclusive-tie-up-with-flipkart/articleshow/46836378.cms?from=mdr
Banerji, S. (2019). Xiaomi bets big on offline as online sales saturate. https://www.businesstoday.in/technology/news/story/xiaomi-bets-big-on-offline-as-online-sales-saturate-190377-2019-04-25
Bedford, T. (2022). Best Xiaomi phones of 2022: these are the top Mi, Redmi, Poco and Black Shark devices. https://www.techradar.com/in/news/best-xiaomi-phones
Cul, M., Zhao, Y., Aziz, S., & Xiao, M. (2017). Xiaomi: Entering International Markets. https://hbsp.harvard.edu/product/W17235-PDF-ENG
Firstpost. (2015). XIAOMI SALES TRIPLED IN 2014, OVER 61.12 MILLION SMARTPHONES SOLD. https://www.firstpost.com/tech/news-analysis/xiaomi-sales-tripled-in-2014-over-61-12-million-smartphones-sold-3660867.html
Wei, R., & Long, Q. (2021). Research on Xiaomi’s Internationalized Business Model. Open Journal of Business and Management, 9(03), 1050.
Yang, H., Ma, J., & Chattopadhyay, A. (2021). How Xiaomi Became an Internet-of-Things Powerhouse. https://hbr.org/2021/04/how-xiaomi-became-an-internet-of-things-powerhouse
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