Xiaomi Phones - Entry into Thailand Market
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Xiaomi Smartphones Entry into the Thailand market
Transcript of Xiaomi Phones - Entry into Thailand Market
Xiaomi Smartphones Entry into the Thailand market
Agenda Company Background
Country Analysis
Industry Analysis
Recommendations and Five-Year Action Plan
Conclusion
Introduction
Company Background Our philosophy and products
Our Company Founded in 2010 in China
One of the fastest growing online-based companies in the world
We stand for Innovation.
Efficiency. Freedom.
Introduction
Our Company
Mi Smartphones
MIUI
MiChat
• Medium-price • High performance
• Operating system for Mi phones
• Android-based
• Voice chat and instant messaging mobile app
Introduction
Xiaomi phones are “Born to inspire mania”
With 2 million fans all over China, the Xiaomi craze is a nation-wide phenomenon.
Introduction
Xiaomi phones are sold out in a flash
When new batches of Xiaomi phones are put up online for ordering,
They are usually sold out within half an hour. Over 3 milion phones have been sold.
The Mi-2 phone: Flair and Functionality
4.3 inch display 720p gapless IPS display 1.5GHz Quadcore chip 2 GB RAM
The Mi-2 phone: Flair and Functionality
iOS style homescreen Voice Assistant Panorama mode for camera 1080p HD video taking
The Mi-2 phone: Flair and Functionality
Music Player with automatic search for synchronized lyrics New style home screen – Study Room & Angry Birds theme
So Many Features…
But sold only for RMB 1999!
“More for less” pricing strategy captures middle segment
Introduction
People are the most
IMPORTANT MEDIA.
delivers them the superior product they want and need,
and they create the crazy hype through social media.
That’s why Xiaomi products are “Born to inspire mania.”
Social media: Costless hype machine
Each weibo message has over 1 million views and 30k shares! Social media is an extremely cost-effective medium for wide spread hype.
Exclusivity: Uniqueness with affordability
Phones are sold in small batches of 250,000 only, thus are sold out quickly. The Xiaomi phone becomes a superior trendy accessory due to its exclusivity.
User Engagement: Community breeds loyalty
With a mascot and other Xiaomi brand merchandise like caps and t-shirts, Xiaomi fans are a community. User engagement becomes easy with fans leaving feedback enthusiastically on the official forums.
Valuation: Full investor c0nfidence
3 rounds of funds raising from international investors
Valued at USD 4 Billion! (Blackberry: 5.4 Billion)
Introduction
Why Xiaomi?
Wide acclaim and huge sales success in home country means the product has potential Fierce domestic
competition drives the search for foreign markets to
diversify risk
Introduction
Why Thailand? Low cost and low barriers of entry in Thailand
High demand for smartphones with
relatively low penetration rate (27%) presents ample opportunities
Country Analysis What are the risks involved in
doing business in Thailand?
Situation Analysis
Geographical Environment
Central Thailand • Fertile area • Dense
population • Metropolitan
Bangkok
Eastern, southern and northern
Thailand • Mountain
areas • Forestry area • Natural
resources • Mining, rice
cultivation
Situation Analysis
Economic Environment Placed 60th place worldwide and 10th place regionally in the 2012 Index of Economic Freedom
Emerging country: 4-5% annual growth in GDP
Export-driven country, easing monetary policy
Corporate tax rate is reduced to 18% from 30%, favorable FDI conditions
Smart Phone Xiao Mi (M1/M2) Nokia
(C3-00/ X2-01) Samsung
(GT-S5570) Apple
(Iphone/Ipad)
Price US$240/US$320 US$228/US$128 US$296 US$747/US$399
Market Share at June 2012
N/A 48% 15% 3%
Economic Environment
Xiaomi phones are much more affordable than the Apple iPhone 5 or Samsung Galaxy SIII.
Introduction
Trade Environment “Ease of doing business”: 17 out of 183
Imports > Exports (US$12.1 billion trade deficit): rising middle-class
Member country of Association of Southeast Asian Nations (ASEAN) • Other members include Indonesia, Malaysia,
Philippines, Singapore, etc. • Free flow of investment and manufacturing • Free trade with China, Korean, Japan, etc.
Social & Cultural Environment
Social & Cultural Environment
Social & Cultural Environment
Political & Legal Environment
Instability
Red shirts vs. Yellow shirts
Deteriorating health of the
KIng
Frequent military coups
Inherent instability in
the South
Political & Legal Environment
Thailand was ranked as the
5th most corrupt country among the 16 Asia-Pacific economies.
Bribing becomes a direct cost for businesses.
Industry Analysis The competitive landscape in
China and Thailand
Industry Background - China
Domestic vendors drive the growth, Majority uses Android System
China is the biggest projected smartphone market: Smartphone sales > Feature phone sales
1 2
3
4
5
Domestic Brands
Competitive Advantages
Veteran experts from Google, Microsoft and Motorola clear vision and technical know-how
Elimination of channel costs lower price
High performance at attractive low price
Competitive Disadvantages Single sales mode
Lack of effective after-sales service
Lack of quality control
Lagged behind in the cooperation with mobile operators
Frequent appearance on public media complaints
Not enough maintenance spots + high repair charges
Introduction
Industry Background -Thailand
Overall mobile phone market: rose by 9%
Feature phone market: dropped by 5%
Smartphone market: rose by 85% Rapid growth in Mobile phone market
Industry Background -Thailand
Population 67 million
Total no. of mobile subscriptions 77 million
% of Mobile Penetration 115%
Total no. of Internet users 25 million
% of Internet penetration 37.3%
No. of mobile Internet users 1 million
Large untapped market for feature phone users to switch to smartphones and access mobile Internet services
Industry Background -Thailand New 3G and 4G frequencies license auctions coming up in 2013
Almost half of Thailand’s Internet users say mobile phones are their preferred mode of access to the
Internet
Faster speeds of mobile Internet access and wider access of 3G or 4G services from telecom operators = increase in demand for mobile services
Industry Background -Thailand
Competitors Analysis
49%
15%
10%
7%
5%
3% 2% 2% 1%
6%
Overall handset brand market share (Primary Phone)
Nokia Samsung i-mobile Blackberry G-net mobile Apple LG WellcoM Motorola Others
Overall market dominated by Nokia & Samsung
However, Apple has 78% of the
smartphone market
= Thais are ready to accept high price
point
Competitive Advantages
Focus on development of hardware + software Acquisition of startup software companies eg. Duokan
Abundant investment from foreign investors
High performance at attractive low price
Competitive Disadvantages
Relatively short development time
System crashes + bugs
Weekly updates by users needed
High cost of setting up maintenance
stations
Cost-ineffective to mail back phones
to China for repairs
Lose customer confidence in service quality
Recommendations Our five-year plan to expand
into Thailand
Strategic Orientation
Product-Orientation
Production-Orientation Mi-1 & Mi-2
• High performing operation system
• Technological capabilities and innovation
• Low cost production, distribution and marketing
• “More for less”
Target Smart phone enthusiasts
Low Production cost
Distribution cost Marketing cost
High Performance
Specifications Innovation
Value Proposition
Positioning
Expensive Cheap
Innovative mobile Internet functions
Traditional feature phone (eg. Voice call, SMS)
E, L, & N Series
A, C & X Series
Galaxy S & R Series
Galaxy M Series
Torch & Bold Series
Curve Series
High functionality, medium price
Action Plan
Short-term Plan (1-2 years) Direct Export to Test Market
• Product & Price: 20 million of M1 and M2
• Place/Sales channels: Online sales platform & collaborate with Thailand local telecom-operators
• Establishing a warehouse in central Thailand
Mid-term Plan (3-4 years) Expansion
• Self-owned App Store
Applications
eBooks + Podcasts
Long-term plan (over 5 years) Regional Hub
• FDI: Manufacturing factories in central Thailand
• Regional hub of south-east Asia business
Conclusion
Is going to enter the Thailand market through direct export initially
while aiming to set up a regional hub there in the long term.
High demand for smartphones will be the major profit-driver for Xiaomi,
and the company will continue using the “More for Less” pricing strategy.
Thank You!
