“China’s biggest startup is in a heap of trouble.” – CNN Money.
Description of Event
In an article published in CNN Money, the news was revealed that China’s topmost Smartphone manufacturing company Xiaomi is currently facing a downfall and stagnancy in its growth as compared to its previous records. The company is China’s largest as well as the cheapest market for Smartphones and gadgets which helped it earn huge profits at the beginning of its launch five years ago however the sales are not very promising as of today. The strategy that has been employed by the company is to fill the market with its own gadgets as compared to the others that are sold worldwide, primarily with its rivals Apple (iOS) and Samsung (Android). Yet the sales in 2015 are recorded as starkly low as compared to those of 2014 when the company was growing at the rate of 211%. The need of the hour is for Xiaomi to make new accessories, hardware and applications to keep the popularity high amongst the customers. With previously soaring sales, Xiaomi was also called the Apple of China, but it is impossible to call it so today. However, it was also in the initiation of its launch that Xiaomi was able to beat Apple and Samsung sales in China with its own brand.
Connection to International Business
In the era of Smartphones, every company has its set targets and goals and an audience to satisfy. With Apple and Samsung, with iOS and Android doing the best for them respectively, they have successfully set the largest pool for the Smartphone market. Other brands are trying to create cheaper and more affordable phones at the same time meanwhile targeting the developing countries so as to have a larger sale and a more eager audience. Xiaomi has a market that spread and gained roots in four years, and its success is remarkable yet at the same time, it carries bad news for iOS and Android phones that are being avoided in these markets for the sake of cheaper yet equally well-equipped Smartphones. International business runs on iPhones and Samsung sets, and they are being given a backseat in sales as compared to the rapid success of Xiaomi phones and accessories. Xiaomi concerns international business because it is a potential company to stretch its roots and gain ground in other countries of the world. If the international business community embraces its ventures and allows it to penetrate their markets, then there can be serious competition for the rival Apple and Samsung that are currently leading in sales. However, the dropped sales raise questions about whether Xiaomi would be able to succeed in the international market or not if its sales in its own country were suffering so badly . A term known as local regulations might also get in the way of progress of Xiaomi in other countries because of the already present myriad of companies and their products in their markets. Companies like Huawei and Haier are already making phones of the same price as Xiaomi hence they are sufficient competition alone.
How Others Benefit/Learn from the Situation
What other businesses or companies need to learn from the situation is to build up the brand name and recognition before they can venture to compete in the long run with top brands that have an already eminent name and place in the market. Taking an example of the iPhone, Samsung, LG, etc., all these companies are established well and have gained customer loyalty. Loyalty was also gained through the introduction of better and enhanced features in phones that attracted people. On the other hand, Xiaomi produced cheaper phones with lesser features that did not appeal to the public for some time, and they shifted their attention to other prominent brands. Hence, Xiaomi needed to think through its policy of building brand recognition, and this goes for all startups and new businesses that need to improvise and bring about innovation if they wish to compete with leading brands even if their own brand comes with a lower selling price.
Link: http://money.cnn.com/2016/01/13/technology/xiaomi/index.html
References
King, H. (2016, January 13). China's biggest startup is in a heap of trouble. Retrieved January 17, 2016, from CNN: http://money.cnn.com/2016/01/13/technology/xiaomi/index.html
