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Xiaomi Entering International Markets Case Solution

Solution Id Length Case Author Case Publisher
2588 1414 Words (6 Pages) Miao Cui, Yan Zhao, Sitara Aziz, Mimi Xiao Ivey Publishing : W17235
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To summarize, Xiaomi had been facing problems in China lately due to a cringing operational environment, hence the need to move out to the untapped market becomes quite inevitable. The conditions in South Asian and other countries are largely on the favorable side for Xiaomi, because of a growing market, the population being on the younger side, hence the demand for smartphones is also increasing. Further, is it important to note that the operating conditions in the new countries are also promising, because of reasons like lower cost of materials, the labor services could be obtained at a much cheaper cost, and also there are limited regulations from the government side when compared to China. Also, since the general public belongs to the middle class in the sub-continent and they want a mobile phone with multiple features, on a limited budget, which Xiaomi’s smartphones very well possess, thus the industry looks very auspicious for Xiaomi to proceed with its commercial operations.

Following questions are answered in this case study solution

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

  2. How did Xiaomi enter the international market? 

  3. Why is Xiaomi in trouble now?

  4. What choice should Jun Lei make?

Case Analysis for 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?

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