The West Does Not Understand Xiaomi’s Customer Base

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January 2, 2015 by ...

Western media often fails to ‘get China’. Perhaps it is a distance thing, after all, how well can one understand such a diverse country from one’s desk in New York?

Case in point from the Wall Street Journal Cheat Sheet on Xiaomi’s customer base:
‘The company has built a following by marketing its products with online campaigns that appeal to young and affluent Chinese consumers, and is poised to capitalize on the scale of the Chinese market.’

Xiaomi customers are ‘young and affluent’?

From this we can see just how wrong the WSJ is. The WSJ got it half right; Xiaomi targets younger consumers, but they are anything but rich. As I will explain below, affluent Chinese do not buy Xiaomi because it has no ‘face value’. Simply put, Xiaomi targets low to middle income earners in China’s lower income towns, known as tier 2 & 3 cities.

Cashed up Chinese do not buy Xiaomi phones. The principal reasons for this revolve around two key points: face and value. First off, China is a face-centric country. Face defines one’s value in society. It is obtained by being aware and possessing things that others do not.

Generally speaking, made-in-China goods do not confer face on their users. They usually have marginal quality and sold on the cheap. Chinese like to appear worldly and opting for a local brand runs contrary to this. It makes them feel like Okies who cannot afford a higher quality good. They also feel that by patronizing local brands them seem shallow and out of touch. After all, Chinese smart phones are priced as bottom dwellers, so other than a low income earner, who really wants one?

Paradoxically, Xiaomi has plenty of traction with low wage earners who see Xiaomi kit as a ‘starter smart phone’ which has good value for the money. For them, Xiaomi is the ‘Apple of China’ and costs one month’s wages. As such, many buy a Xiaomi to show that they are upwardly mobile. Sure they cannot afford anything better yet, but Xiaomi has more cachet than other Chinese brands. Thus they are not really okies as much as ‘economically challenged’ consumers whose financial position limits their choices.

Anecdotal evidence proves this as well. I have lectured at universities and queried this 28-35 demographic about Xiaomi and they have reinforced my claims. Most of them will not buy Xiaomi if they have the money to purchase another brand. In addition, they claim that the company merely sells ‘shanzhai‘ gear or Apple knockoffs. In writing about the firm they are even more direct but reinforce observations written about here.

Xiaomi is popular for a certain segment of the Chinese market, but this does not include the affluent.


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