Xiaomi needs inspired branding in US

As we enter the Year of the Ram, more Chinese brands are roaring like lions on the world stage.

The major finding of this year's BrandZ report on the world's most valuable brands, produced by market research firm Millward Brown, is the continued rise and assertiveness of Chinese brands, especially those of technology and Internet companies.

China's major smartphone brand, Xiaomi Corp, now the world's third-largest smartphone maker, is a perfect example of this development.

Xiaomi has wowed the tech world with smartphones boasting features similar to those of Apple Inc's iPhone or Samsung Electronics Co Ltd's Galaxy at less than half the price.

Xiaomi's products also enjoy an enviable reputation when it comes to functions and features, such as stronger processing power and more storage than many of its rivals.

Domestically, Xiaomi has had rapid success. But it is the company's international expansion plans that capture the new self-belief and determination among Chinese companies, especially younger, market-driven companies.

Overseas markets currently account for about 5 percent of Xiaomi's global sales, but that figure is expected to reach 20 percent this year.

The company sells its phones in India, Singapore, Malaysia, the Philippines and Indonesia.

It has also announced plans to launch an online store in the most lucrative market, the United States. But the company will not sell smartphones through that channel, called Mi.com. Instead, it will sell a selection of smaller branded products such as headphones, air purifiers, smart wristbands and mobile power chargers.

This strategy makes perfect brand-building sense.

The US market is by far the most competitive yet for the Beijing-based company. It is a mature market as well, where typical consumers are loyal to their smartphone brands. Xiaomi's brand awareness and image remain low in the US.

Xiaomi can take confidence from its meteoric rise in China and other Asian markets, but a major change in its branding strategy may be necessary for the US and West European markets.

Apple and Samsung offer apparently fierce competition, with dominant brands that raise the barriers to entry considerably in these markets.

But that might actually offer an opportunity to Xiaomi.

To build up its brand awareness and image effectively with US consumers, Xiaomi probably needs to use a two-tier brand strategy. Such a strategy will still require strong promotion of the Xiaomi name, but crucially, it will also involve the introduction of an emotionally associative product brand name.

Samsung, with its Galaxy sub-brand name, has led the way forward in the global smartphone race and Xiaomi should follow a similar path.

The author, Mike Bastin, is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer on marketing at Southampton Solent University's School of Business.