Miruna Codeanu

The importance of buying local when going global

In espresso on April 28, 2014 at 6:45 am

Xiaomi is going global, Forbes writes. Xiaomi will be entering 8 new markets: India, Brazil, and Russia as well as Indonesia, Malaysia, Mexico, the Philippines, Thailand, Turkey, and Vietnam.  Forbes says Apple should be afraid. Xiaomi is an Android phone. I believe Samsung, as the largest Android phone manufacturer should be afraid. On this occasion we should also reflect upon the importance of  buying local. 

Xiaomi is one of China’s biggest electronics company. Although, privately owned, we should already be aware of China’s preference for local merchandise. Xiaomi outsold Apple in China last year. “Unless you insist on having a depiction of a piece of fruit on your device, you will go with the Xiaomi offering every time.” Forbes writes. However, I’ve said it before, Apple is not only an electronics company, it is also a trendsetter and lifestyle indicator. It is commonly acknowledged that in developing countries, the status indicator has more significance and people are more likely to spend more in order to own that status indicator. Remember, the case in China when 20.000 students applied for high interest loans in order to purchase Apple products. Yes, that happens in developing countries. From many perspectives, Romania is still a developing country and Romania is a very good market for BMW for example. So, Xiaomi and Apple have a different target. Question is who will expand in whose territory? Clearly, lately Apple has been trying to get some market share from Samsung. Or Will Xiaomi go in the lifestyle area and try to get some of Apple’s market share? 

Samsung started to outsell Apple the moment it started creating products for a wider target. I had a revelation about an extremely smart strategy Samsung has. Samsung has products for a wider range of consumers. So you aren’t really into smartphones, but one day you decide your old phone needs to be replaced. So you’ll probably get a very basic smartphone. I would rather call these phone fun-phones. Their  owners basically run 3 apps: a browser, Facebook and maybe email. Pretty soon after that they decide they need more, they’ll go to the next level. And so on, until they will eventually get a Samsung S n or maybe n+1. You know what Samsung is doing? Samsung is raising and educating its customers. A bit brilliant. Let’s say you sell detergent. And from then on you develop a product for babies that smells in a certain way. And you enlarge your product range to a whole lifestyle depicting area. You basically create a psychological reflex. Soon, with the help of neuromarketing, we’ll be able to do that, and create perfect products for the appropriate target. 

I have yet to hold a Mi3 in my hand, but I’ve been looking at pictures. Xiaomi runs Android. We must have all heard about the Samsung Apple patent trial.  A few years ago Apple sued Samsung over “slavishly” copying its products. Later on Samsung sued Apple over its 3G technology. And from here on it is a never-ending story, with Apple trying to get a ban on Samsung products, which to me is absurd, equivalent of monopoly. I believe in competition as driving evolution.  With Xiaomi going global, Apple might have found its next candidate for a patent infringement trial. It would seem so. Let’s remember something: Apple still holds hopes about the Chinese market and growth based on the Chinese market. Although Xiaomi is not a state owned company, China and the Chinese consumer tends to be biased when it comes to choosing between local and external brands.  This is why Apple put its advertising efforts into “Proudly designed in California” at home. 

Let’s take a look at the countries where Xiaomi will make its entrance this year: Indonesia, Malaysia, Mexico, the Philippines, Thailand, Turkey, and Vietnam. Developing countries. Most likely Samsung outsells Apple in these countries. Most likely Apple means lifestyle for its audience in these countries. Xiaomi doesn’t yet have strong additional values attached to its products (branding). Chances are, Xiaomi will be going after Samsung and not Apple. Xiaomi proved they can market their products at home, but will a Chinese company adapt itself to the international market? China has been making acquisitions throughout the whole world, which has been extremely good practice for the Chinese managers. With all that in mind, we should remember Western companies have more experience and know how about managing global businesses.

unnamed (3)All business managers should take a break from time to time and watch Xiaomi, as it will probably be one of the first cases of entirely Chinese company (from branding to manufacturing) going global. May you live interesting times and never underestimate the importance of buying local when going global. We should also be waiting for some acquisition of western small companies for Xiaomi, know how needed.

Disclaimer: I am an Adroid user and do not insist to have a fruit on my device, I went for the bigger, better screen from the very beginning.




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