According to Bloomberg Businessweek’s latest issue, Xiaomi is the most popular smartphone brand in China at the moment. Xiaomi, founded in Bejing, is just four years old, but millions of chinese follow the brand already. This Cult like Fan Culture we know from only one other brand, which is Apple. That extreme popularity is caused in parts by the popularity Xiaomi CEO Lei Jun who a lot of people compare to Steve Jobs. Also by Xiaomi’s extreme clever use of social media and Online Sales.
Lei Juns says though that Xiaomi differs from Apple:
“Our business model is more similar to Amazon,” Lei said, referring to Amazon’s habit of selling hardware at cost. On their profit strategy he said “We sell all our products online and our gross profit rate is very low. Our price is one third of Apple’s,” he said. “We make our profits through content and services.”
Also Xiaomi, is not the only Chinese Manufacturer that wants to conquer markets beyond China. According to Shao Yang, who is the Marketing head of Huawei mobile phone divison, it is not sure yet who will be the dominating chinese brand outside China. In General he argues that there needs to be another brand to challenge the dominance of Apple and Samsung: “Two brands is not a stable architecture,”. Shao VP for Marketing at Huawei says also: “Everyone wants to have a third brand. Where this third one comes from—China is a very obvious choice, because China is the biggest market.”
Xiaomi’s leaders Lei Yun and Hugo Barra, who joined Xiaomi last year from Google, trying very hard to be that third dominant brand with a very agressive Expansion Plan for Xiaomi worldwide. Shao Yang argues though, that the long term relationships that Telecom Giant Huawei built over the years can not be matched by Xiaomi. He says in an interview about Xiaomi: “They are quite dynamic. That’s their advantage,”. According to Shao the relationships that Huawei built with carriers and partners will make the difference in the end, he says: “trust is more important.”
Huawei copying XiaomI Flash Sales with their Rush Buys
Huawei’s Marketing and Social Media Strategy might be not as sophisticated as Xiaomi’s but they have made big progress in building their own brand with a number of devices. Just recently they launched 5 new devices in Malaysia, most popular being their Ascend P7 smartphone flagship, postioned against Samsungs Galaxy S5.
According to Bloomberg Industries Huawei sold 13.5 million smartphones versus Xiaomi’s 10 Million smartphones worldwide for the first quarter of 2014. In terms of Pricing both brands seem to follow the same strategy of extremely reasonable prices for high specs, while Huawei is with an average price of RM500 (155.30 USD) a bit cheaper then Xiaomi’s RM 510(159.60 USD). Both companies sell their smartphones now under their own brand. Only three years ago Huawei sold most of their mobiles under carrier brand and only 30% under their own.
While both Xiaomi and Huawei are catching very quickly up in terms of popularity and brand building, that does not mean they will be able to keep the success. If we have a look at the taiwanese manufacturer HTC we can see some similarities to Huawei. HTC, as Huawei, started selling out mainly to Carriers and shifted to selling their own brand quick. HTC became most of the top popular smartphones for the U.S market, but now they cant compete with Samsung’s huge marketing budget and Apple’s style and fighting to stay alive.
Huawei’s Marketing VP Shao is sure that this story will not repeat with their company, especially because of their experience with history of selling 3G and 4G equipment to carriers. “We think three things are fundamental for smartphones,” Shao explains “No. 1 is hardware, No. 2 is software, No. 3 is telecommunication. The best hardware is from Samsung, best software and user experience [are] from Apple, and Huawei is the one that can provide the best telecom connectivity. This is the advantage of Huawei. People know that Huawei can provide the best 4G.”
In Malaysia it is not decided yet which Chinese manufacturer will be the more dominant. Xiaomi gained a lot of popularity recently with their weekly Flash Sales, in which thousands of their devices regularly sell out in a few minutes.
But Huawei’s devices, especially the RM499 Honor 3C seem to be equally popular. For the Malaysian Customer the more exciting question might be if both companies can make sure that they can deliver enough stock for the Market. Otherwise Apple and Samsung will stay longer very lonely as the Top Mobile Phone Manufacturers.
What do you think who will be the dominant brand in Malaysia? Huawei or Xiaomi ?