The Chinese smartphone market is shaping up to be a bonanza for local manufacturers who have the advantage of a large marketplace that has money to purchase their many offerings. China has become attractive enough to make the current smartphone king, Apple, enter the market with its high end iPhone along with the iPad. The cupertino-based firm is also thought to be developing a cheaper iPhone to capture more market share in China, which Apple considers a very important market. Entry into China will not be easy for foreign competitors because a large number of local manufacturers have strong footholds and in include giants like ZTE and Huwaei. A smaller Android powered device maker called Xiaomi is also benefiting from the strong demand in the Chinese market. The small firm has recently stated that it will manufacture 15 million smartphones for 2013 and does not predict it will have any overstock. The new numbers from the firm indicate that is is doubling its production from the 7.19 million units it made and sold last year. In 2012 Xiaomi had 12.6 billion RMB or $2 billion in revenue after tax.
Lei Jun, CEO of Xiaomi, has stated that the company will only make as many devices as it can sell and will not keep any overstock of devices. Some critics have stated that the company is using a strategy of under-producing that is creating false demand for its devices. Lei has defended his company’s methods and claimed that they are keeping their company’s resources in tact by not being wasteful and producing more than they can sell. The Chinese firms CEO did say that their strategy has backfired in some ways because they been delayed 3 to 4 months on deliveries.
Qiming Venture Partners’ Hans Tung is a investor in Xiaomi and has claimed that the company makes roughly 10 percent profits on each device.That means the company made $190 million in profit margins and giving it the edge over other local competitors like ZTE, Huawei and Lenovo.
Xiaomi started off as a developer of mobile applications and also runs a portal. The Chinese firm got started in April 2010 and has mainly made apps for iPhone and Android smartphones. Some of their most well known apps include Xiaomi Chat , Xiaomi Reading, Xiaomi Share, Xiaomi Driver and Millet Notes. Mi2 is the company leading smartphone which sells for a very competitive $318.
Source: TechCrunch
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