October 24, 2014 by ...
Xiaomi is the rage. Chinese wield its name in nationalistic tones claiming it the pride of China, or at least that is what they tell you. For those of us living here it is quite a different thing. Take for instance, data from recent surveys I have done and one can see quit a different picture. Many Chinese admire the fact that Lei Jun is having success overseas, but to most Xiaomi is still seen as selling knockoffs. A cheap copy of a phone costing three times as much which is out of the reach of most of Xiaomi’s target demographic.
People buy Xiaomi on price
The simple fact is that most people buy Xiaomi because their financial situation allows no better. Sure they laud it as being creative but fail to explain why. For example, in lectures I guide the topic to Lei Jun and company. I first have my masters candidates extoll the virtues of the firm and what its future holds. The conversation quickly takes on a pro-China bent, and I push them to explain. They claim lei Jun is a strong leader and market disruptor. I ask why. If you count nose picks and brow scratches as answers, then the students have it nailed, if not then Xiaomi is digging its own grave. A ‘me too’ product which is nothing more than a weaker facsimile of that which it is trying to be is still merely a facsimilie.
In addition, I ask them to explain Xiaomi’s innovation and answers spring from their mouths in an impressive if not always logical fashion. Typical responses are that the phone has Apple specs at a fraction of the cost. I reply that this is truly remarkable! I then ask how many of them have a Xiaomi as 95% are in its target demographic. A few hands go up, but most do not. In the eyes of many Chinese, owning a Xiaomi is admitting your cannot afford an Iphone. In a face- based culture, this is social death.
Is Xiaomi scalable?
The conversation soon turns to Xiaomi’s chances of success in my home country, the USA. I say that any such techno juggernaut should have no problem cracking the American nut and their eyes shine with rapture. I then ask what would compel an Iphone, Nokia or Motorola user to defect to Xiaomi. They use the China mantra that it’s cheap but a good value. I wave my non Xiaomi phone and reply that for $100 I can get an Iphone 6. A few hundred more nets me the 6 Plus with multi-year contract. In a land of free cell phones, what is the draw of an Apple clone? I am not being trite, I teach a business class and they need to understand business. ‘Explain to me why my peers back home would exchange this, for this?’ And compare Xiaomi to my other handheld.
Racking their brains they realize that Xiaomi’s features are really China-ventric, I mean ‘really Xiaomi’ I have to give up Google play if I buy. You?’ Worse yet, if by migrating from Apple I lose my songs, books and everything. Is it logical to give up the real McCoy for its pirated twin?
The audience melts.
What they and many people in the western media do not get is that Xiaomi is a starter Iphone, nothing more. While Xiaomi does innovate in many ways, products are not one of them. Simply put, Lei Jun lifts designs from Apple and convinces China’s 20 somethings that they are getting a shanzhai Iphone with the same guts. This is all well and good when price is a consideration amd obviously this is true in many countries. In. Brasil, for example, I would bet that Xiaomi will take off. Not to mention the success they are having in India. My point is merely that they will always be chasing those people whose eyes are glued on their next smart phone, the one they really want. Xiaomi is merely the ugly girl you dance with until you get up enough courage to ask that hottie in the red dress if she she is up for a spin.
Xiaomi has otherworldly marketing skilss, but in most respects, innovative it is not.