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Xiaomi to call on Singapore for international expansion

TOKYO — Since August, when Chinese mobile phone maker Xiaomi lured away top Google executive Hugo Barra to oversee its international expansion plans, two big questions have remained: When and where would Xiaomi turn its attention?

Xiaomi’s phones use the Android operating system and are considerably cheaper. Photo: Bloomberg

Xiaomi’s phones use the Android operating system and are considerably cheaper. Photo: Bloomberg

TOKYO — Since August, when Chinese mobile phone maker Xiaomi lured away top Google executive Hugo Barra to oversee its international expansion plans, two big questions have remained: When and where would Xiaomi turn its attention?

The company has now provided some clues.

At a media event in Taiwan, Xiaomi said it planned to set up shop in South-east Asia early next year. When pressed for details, the company’s press office said Singapore and Malaysia would be the first markets in the region to get Xiaomi phones.

So far, Xiaomi’s only major forays outside mainland China have been into Taiwan and Hong Kong. There, the company has stirred up considerable interest. On Monday in Taiwan, a “flash sale” on the Internet of 10,000 of the company’s Hongmi phones sold out in less than 10 minutes, the company said.

Xiaomi has generated considerable attention because of the company’s marketing savvy, with some analysts comparing the hype that surrounds the brand and its founder, Mr Lei Jun, to the excitement that accompanies anything related to Apple and its late co-founder Steve Jobs.

Yet Xiaomi’s phones are considerably cheaper. The Hongmi, for example, is priced at NT$3,999 (S$169). For cost-conscious consumers in mainland China, the difference is especially stark — Apple iPhones list at US$750 (S$938) or more.

For these and other reasons, Xiaomi has quickly built a following. Still, its market share in recent quarters in China has hovered at about 5 per cent — substantially below the leader, Samsung Electronics, but rivalling Apple. Xiaomi executives have said the company is on track to sell 19 million phones this year and plans to have twice as many sales next year.

Xiaomi has benefited from the chaos of the Chinese mobile business. The company has sought to bring some order, integrating its hardware with an attractive content and software offering. Xiaomi’s phones use the Android operating system, developed by Google, but Google’s mobile application store, Google Play, is not officially available in China. That leaves plenty of room for alternative app stores and other content providers.

Yet analysts wonder whether Xiaomi can be equally successful abroad. For starters, competition will be fierce. In addition to giants such as Samsung, other Chinese smartphone makers like Lenovo and Huawei have big plans for markets such as South-east Asia.

Mobile app stores such as Google Play and Apple’s App Store are also more established outside China, making one of Xiaomi’s big selling points less attractive unless it comes up with must-have content.

Xiaomi has also been willing to sell phones at low prices in order to get people to buy its content.

This effectively amounts to subsidising phone sales — something Chinese network operators are reluctant to do. Elsewhere, subsidies are more prevalent. But Xiaomi executives in Taiwan signalled that they would remain flexible, adapting their business model as needed.

“In some countries, carriers act like they do in Taiwan,” Mr Barra said at a news conference, according to the website Tech in Asia. “They’re in the business of selling phones and offering subsidies. In other countries they’re not. So our strategy will vary a little bit from country to country.”

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