China’s Xiaomi overtakes Apple as No. 2 smartphone vendor


    GUANGZHOU — Chinese smartphone maker Xiaomi leapfrogged AppleĀ in the April-June quarter to become the world’s second-largest vendor for the first time, buoyed by strong sales in South America and Africa.

    Xiaomi’s meteoric rise follows the fall of compatriot Huawei Technologies, which only about a year ago was in a neck-and-neck race with industry leader Samsung Electronics until it was hit by a U.S. blacklist.

    Xiaomi shipped 53.1 million units in the second quarter, upĀ 86.6% on the year, data released Friday by research firm IDC shows. The companyĀ grabbed a global market share of 16.9%, up 6.6 percentage points and edging closer to Samsung, whose share shrank to 18.8% from 19.5%. Xiaomi surpassed Apple’s slice of 14.1%, which itself increased from 13.6%.

    The Chinese vendorĀ ranked third domestically after compatriots Vivo and Oppo in the second quarter. But Xiaomi’s overseas expansion strategy gaveĀ a lift, as its handsets apparently sold well in emerging markets such as South America and Africa as well as in western Europe.

    The outcome was not entirely a surprise as research firm Canalys this month issued a forecast naming Xiaomi as the world’s No. 2. Lei Jun, Xiaomi founder and CEO, took to Chinese microblogging site Weibo in mid-July to proclaim the highĀ ranking a testament to the company’s successful strategy.

    Xiaomi unveiled its first smartphone only 10 years ago, in August 2011. Lei, often called “the Steve Jobs of China,” says he was inspired by the late Apple co-founder to establish his own company.

    The businessĀ initially gained customers with ultra-affordable phones sold for 1,000 yuan ($155 at current rates). Xiaomi shifted its international drive into high gear duringĀ 2014, entering markets such as India, and emerged as the world’s No. 3 forĀ smartphone shipments inĀ the third quarter of that year.

    A roller coaster ride followed, with Xiaomi falling out of the top five globally as Apple once again charmed Chinese consumers and Huawei expanded its reach. But Xiaomi’s insistence on low prices fueled a comeback.

    The company from 2016 placedĀ a stronger focus on design and quality, releasingĀ higher-performance modelsĀ starting with the Mi MIX flagship handset late that year. The vendor also began offering other consumer electronics around this time.

    Prior to Xiaomi’s 2018 initial public offering in Hong Kong, the board approved a 5% cap on net profit margin for hardware sales, including smartphones. This commitment won the hearts of consumers. After five challenging years, the company was able to enhance product performance substantially, Lei said.

    Xiaomi also benefited from Huawei’s decline. The U.S. ban on supplying chips with American technology toĀ HuaweiĀ made it virtually impossible for the manufacturer to continue producing smartphones, and the company was forced to sell some of its brands.Ā Huawei, onceĀ close behind Samsung, has lost momentum.

    But it is unclear whether Xiaomi can boost market share and operations further. In the high-end space, Xiaomi apparently lags far behind Samsung and Apple. Canalys says Xiaomi’sĀ average price is about 40% less thanĀ Samsung and 75% below Apple. Also, Oppo and Vivo are building expertise in mass- and midlevel models while eyeing the upmarket segment, heating up the battle among the three Chinese rivals.

    Shipments at Samsung and Apple also are expected to surge in the fall after their customary releases of new models. Xiaomi lacks the kind of distinctive service or manufacturing advantages that Apple and Samsung possess — namely, the U.S. company’s exclusive operating system or the South Korean leader’s in-house chipmaking capability. Lei acknowledges these challenges and says he anticipates an intense “seesaw” game down the road.

    In March, Xiaomi unveiled plans for a foray into electric vehicles with an investment of $10 billion over 10 years. Developing the new venture into a core part of a comprehensive business that includes smartphones and lifestyle products offers a path to future growth.





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