Smartphone maker Xiaomi woos buyers off mainland

Customers try out Mi3 smartphones at a flagship store of Xiaomi in Wuhan city, Central China's Hubei province, March 30, 2014. Sun Xinming for China Daily

Xiaomi Corp, a Beijing-based smartphone maker, faces branding and localization problems in its pursuit of rapid, healthy development beyond China's mainland.

Xiaomi - seeking to emulate the success of Apple Inc, the world's most valuable brand according to Forbe's - offered 1 million of its smartphones on Tuesday to woo mainland customers via its website and an additional 143,000 handsets to mobile phone shoppers in Hong Kong, Taiwan and Singapore. The promotion was part of the activities to mark the Mi Fan Festival, which falls on April 8.

The company expanded overseas last April, a move originally planned for the second half of 2012. Perhaps cautiously, it entered the Hong Kong and Taiwanese markets first, then moved further into Southeast Asia. It has no presence in Europe or North America.

The overseas market contributed less than 5 percent of Xiaomi smartphone sales in 2013. It has offices in Taiwan and Singapore, with a dozen or so employees.

Though Xiaomi said it got a warm welcome in places such as Hong Kong, it did not invest much in further exploring those places.

"We have no staff in Hong Kong. The city's business is operated by our Beijing headquarters," a Xiaomi representative, who asked not to be named, told China Daily.

Xiaomi has worked with two telecom carriers in Hong Kong - Hutchison Whampoa Ltd and PCCW Ltd. It has rarely been involved with offline promotions; all local advertisements and market campaigns are conducted by the two operator partners, the representative said.

"We do conduct events online, on our Hong Kong official website and social networking platforms such as Facebook. Our business model on e-commerce applies to overseas markets as well," the representative said.

Ruby Lee, an employee at a HongKong outlet of 3, Hutchison Whampoa's telecom service brand, said that compared with international brands like Apple and Samsung Electronics Co Ltd, Xiaomi is not that well - known.

"Our most-purchased handsets are Apple's iPhone," Lee said. "Though we do promotions on Xiaomi, HongKongers are still reluctant to buy one because it is not that popular."

Some Hong Kong people find Xiaomi smartphones don't deliver competent localized applications. Celia Leung, a Hong Kong resident, complained on Xiaomi's Facebook page that her handset has a voice problem running Whatsapp, a mobile instant-messaging tool. Many Hong Kong netizens shared similar application bugs.

Globalizing "is an issue of great significance for Xiaomi, because the company needs to prepare for a future IPO and attract more potential investors by telling the world an inspiring start-up story," Cheney Ji, a Shanghai-based telecom expert, said.

Xiaomi provides customers with high-quality smartphones at competitive prices, making it a major advantage, Ji said. However, other factors, including branding and logistics chains, may pose challenges.

"Xiaomi has to develop localized software and Internet services to complement its expansion strategy in overseas markets," said Sophia Chen, analyst with the Taiwan-based tech research group Market Intelligence & Consulting Institute.

So far, the most significant move taken by Xiaomi to expand overseas was inviting Hugo Barra, Google's former vice-president, to join the company last October in a bid to boost Xiaomi's global business.

Tom Kang, mobile device research director of Hong Kong-based Counterpoint Technology Market Research, said Xiaomi will be successful in Asian markets as its product line and price hit the mark for sophisticated users.

"But the US and European markets will be hard to penetrate as the channel strategy is different, and building the brand will require a marketing budget that is going to require huge resources," he said.