UNIVERSIDAD NACIONAL DE COLOMBIA

FCE – Administración de Empresas

INTERNACIONALIZACIÓN DE LA EMPRESA
DANIELA CARDOZO CASTELLANOS
ENSAYO

THE INTERNATIONALIZATION OF XIAOMI

In recent years we've seen a number of Chinese companies looking to challenge the
established brands like Apple and Samsung, especially in the technology industry. Huawei,
for example, Oppo and now Xiaomi, the fourth largest smartphone brand in the world.
Since its foundation in 2010, Xiaomi has managed to get on the map in a couple of years
with a particular and even curious promotion strategies, procedures, manufacturing,
distribution and sale of hardware and software. Its rapid expansion across the globe turns
out to be a case of study. This essay aims to find some of the keys that hide behind
Xiaomi's success by studying and analyzing corporate strategies that the company has
carried out throughout the last decade, paying especial attention through its
internationalization process around the world.

“With the vision of being friends with its users and being the ‘coolest company’ in
the hearts of its users, Xiaomi is committed to continuous innovation, with an unwavering
focus on quality and efficiency” (Xiaomi, 2020). Lei Jun, Xiaomi’s founder, has shared his
vision of delivering the best quality technology at an accessible price for everyone in the
creation of the Chinese company, on many occasions he has even been compared to Apple
genius Steve Jobs, because of its particular way of managing the company, and even for his
presentations, his way of dressing and the way of communicating new products, are an
example of learning for experience and benchmarking. Currently, Xiaomi products are
present in more than 90 countries and regions around the world and have a leading foothold
in many markets.

Xiaomi is a Beijing headquartered company established in 2010 and started as a

smartphone manufacturer and vendor, now the company has extended its business into
many other close and distant product categories. With the development of the company the
positioning can be more specifically defined as an Internet company. “Their brand “MI”
UNIVERSIDAD NACIONAL DE COLOMBIA
FCE – Administración de Empresas
INTERNACIONALIZACIÓN DE LA EMPRESA
DANIELA CARDOZO CASTELLANOS
ENSAYO

signifies the straight meaning of “Mobile Internet” and the connotation “Mission
Impossible” which reflects the seemingly unmanageable challenges companies confronted
in its development” (Yuan, 2017).

By July 2014, Xiaomi had sold 57.36 million phones and expanded its business into
near neighboring countries such as Singapore, Malaysia, Philippines and India, its line
extension product with sub-brand Hongmi Note was released and shipped 15 million
devices abroad in that year (González, 2019). The sales of Xiaomi smartphones have been
increasing ever since, according to IDC, Xiaomi was the 1st smartphone vendor by sales
volume in Chinese market during 2014 and overtook Samsung and other entrenched players
in the market.

Its business model is quite distinct from traditional smartphone vendor whose
hardware works as a real moneymaker, for Xiaomi, the cheap hardware works just for
generating users and as a distribution channel, the real revenue would be generated
gradually from the software and services the company provides in the long run. While
leading foreign brands such as Apple and Sony make efforts on the style and design, and
most Chinese Companies such ZTE, HUAWEI and Lenovo operate in order to attract mass
consumers, brand Xiaomi differs with them with its distinct strategy of continuously
pursuing to convey the promises such as high performance, high feature, and the image of
durable (Xiao, 2017).

Furthermore, if now the analysis concentrates on the rapid expansion process that
Xiaomi has faced in recent years and it´s done under the perspective of the different
theoretical approaches to internationalization, it will be found that the expansion of Xiaomi
responds to several of them in different important ways. First, according to the Uppsala
model, for example, the company will gradually increase its committed resources in a
specific country as it gains experience from the activities carried out in that market. The
development of the activity abroad would take place through a series of successive stages
that would represent an increasing degree of involvement by the company in its
international operations.
UNIVERSIDAD NACIONAL DE COLOMBIA
FCE – Administración de Empresas
INTERNACIONALIZACIÓN DE LA EMPRESA
DANIELA CARDOZO CASTELLANOS
ENSAYO

This theory of development phases establishes that the company, when wants to
enter a certain foreign market, goes through four different stages, which for the authors
constitutes the so-called establishment chain. Specifically, this chain was defined in the
following four stages: 1st) Sporadic or non-regular export activities; 2nd) exports through
independent representatives; 3rd) Establishment of a commercial branch in the foreign
country; 4th) Establishment of productive units in the foreign country (Johanson, 2014).

Xiaomi released the Mi1 smartphone in 2011. “While initially criticized as being
reminiscent of Apple’s iPhone, Mi1 has gained a solid share of the global smartphone
market. The success of the Mi1 in China led to its introduction in Brazil and Africa,
become a global smartphone brand. In 2014, expansion continued, with the introduction of
the Mi1 in India” (Hyun, 2016). The thing is that Xiaomi had two alternatives for its
expansion: First it could, as many other brands before, that tried their way of expansion in
highly competitive markets, very saturated, with a very strong level of protectionism, patent
fight and a hegemonic position of Samsung and Apple. In short, a fierce face-to-face fight
for a miserable share of the market share. Those conditions and such strong rivals would
have meant suicide for a Xiaomi, Startup of only 4 years old.

Xiaomi took another way instead; BRICS countries constitute a group of emerging
economies that account for almost half of the world population and a quarter of the globe's
GDP. Economic development in recent years and growth expectations in the coming years
makes them a clear source of opportunities compared to the saturation of the economies of
developed countries. Consequently, therefore Xiaomi knew how to take advantage of this
opportunity, which added to its great competitive advantage in cost leadership and a market
penetration strategy, positioned itself as one of the main smartphone brands in these
emerging economies.

Thus, we can consider that the process of internationalization of Xiaomi

corresponds to the assumption of the Uppsala theory, in the sense that it went through the
previously described process, in its expansion throughout the Asian continent and later on a
global level. However, its expansion process does not strictly follow the process described
UNIVERSIDAD NACIONAL DE COLOMBIA
FCE – Administración de Empresas
INTERNACIONALIZACIÓN DE LA EMPRESA
DANIELA CARDOZO CASTELLANOS
ENSAYO

by the Uppsala theory, because Xiaomi continues to carry out its productive activities in its
country of origin. Hence, we must consider other theories of internationalization to explain
the expansion process of Xiaomi.

Therefore, we proceed to analyze the Innovation Model, which indicates that the
relationship between internationalization and innovation consists of assimilating the
decision of a company to increase international commitment to that of making innovations
in a broad sense; being the decisions of internationalization and innovation creative and
deliberate determinants, developed within the limits imposed by the market and by the
internal capabilities of the company, which are made under conditions of uncertainty so that
the managers responsible for making those decisions are assigns the central role in
promoting the process. The stages are: 1st domestic market, 2nd pre-exporter, 3rd
experimental exporter, 4th active exporter and 5th committed exporter (Trujillo, 2006).

Based on this model, we can identify the strategic process that Xiaomi used for its
expansion in the Asian market since 2014. Innovation has always been a primary
characteristic for the company. Xiaomi developed Android-based user interface MIUI for
the company’s smartphone products in 2010 and set up an Internet forum to receive
feedback from customers at the very beginning stage of development. Enthusiastic
customers eagerly participated in the development phase by discovering and informing
defects, bugs, and possible improvements for MIUI (Bushan, 2018). This crowdsourcing of
user interface development was crucial for Xiaomi’s success since the company had no
brand or reputation. The key users not only helped developing but also had an important
role in spreading Xiaomi’s vision and gathering more “Mi Fans”. As a result, in 2011, when
Xiaomi first revealed its smartphone, MIUI user base was already 300,000. The active user
of MIUI further expanded to 190 million by 2016.

Also, Xiomi’s marketing strategy is one of the most interesting matters of the
company. Xiaomi advertise, for example, is one of the keys to its success: saving money on
commercials in helping to keep the overall price lower and maintain its cost leadership
strategy. Xiaomi relied on Mi fans to spread the word in attracting new customers through
UNIVERSIDAD NACIONAL DE COLOMBIA
FCE – Administración de Empresas
INTERNACIONALIZACIÓN DE LA EMPRESA
DANIELA CARDOZO CASTELLANOS
ENSAYO

social media and mainly use Weibo and MiTalk to be its social media to connect with fans
and prospective customers in China market.

Summarizing, this essay took the case of study of Xiaomi as the emerging
multinational entering and operating in an emerging and fast growing smartphone market,
Xiaomi aimed to deploy a global strategy aimed at efficiency in producing standardized
quality product with low price in the global market, as was done in China. This case study
contributes to theoretical and practical perspectives. The concept of emerging
multinationals in an emerging market is relatively new and few studies have addressed the
issue. Moreover, Xiaomi's international expansion case helps illustrate some of the most
important theories of internationalization and emphasizes the strategic positioning work of
a Chinese multinational company in a highly competitive market.

REFERENCES

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administración y dirección de empresas. Universidad de Alicante. Available at:
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Hyun, J. (2016). Emerging Multinationals in Emerging Markets: Xiaomi Experience in the

Indian Smartphone Market. Global Business and Technology, Hankuk University of
Foreign Studies. Available at: http://www.eamsa.org/wp/wp-
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UNIVERSIDAD NACIONAL DE COLOMBIA
FCE – Administración de Empresas
INTERNACIONALIZACIÓN DE LA EMPRESA
DANIELA CARDOZO CASTELLANOS
ENSAYO

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