Xiaomi Entering International Markets Case Solution

1. Why does Xiaomi need to enter Hong Kong, Taiwan, India, and South Asia?

There are a number of reasons for Xiaomi to enter the new markets mentioned above, firstly, it is expected that in China by the end of the year 2015, almost 95% of Chinese would be having smartphones, hence the opportunity for growth is very limited. Secondly, in China, the demand for replacement of the smartphones was also falling, which meant that lower revenue was generated in terms of replacements of smartphones or their parts. Thirdly, the Chinese industry was going through a "cut-throat" environment in terms of competition, this meant that sales prices had to be kept low, high costs were allocated for a marketing budget, and the choices for growth were very slim in an ever-growing competitive atmosphere. As discussed, the prices were quite low for the products and hence the margins of profitability were also on the lower side, this made it really difficult for Xiaomi to sustain itself. And the profit margins of the company overall were alarmingly low, and a lot of "eye-brows" were raised about Xiaomi's existence in the Chinese industry. To talk specifically about South Asia and related markets, there was a lot of young growing population in these countries, and demand for phones was increasing. And it was becoming a trend or fashion to own new smartphones with big screens and extensive features. There had a been a phase of growing “e-commerce” period which had further elevated the demand for the phones. And also, the operators in these countries had comparatively feeble control over the smartphone selling networks, especially in the subcontinent markets, this led Jun Lei to focus extensively on these markets initially. Hence, all the factors mentioned above forced the company to look for avenues outside China, where the Chinese market had become quite saturated and the demand was becoming record low. 

2. How did Xiaomi enter the international market?