Xiomi Case Study
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Xiaomi is one of the most successful smartphone producers in China, and according to the article it has even been described as the “apple of China”. The article tells us that Xiaomi became the most valuable tech startup “worth $46 billion”. The main idea of the article is to show us that this growing trend of cheap smartphones (like xiaomi in this case) is the result of the growing global income inequality.
As people continue to get richer, other people continue to get poorer, the growth of the middle class (specially in countries like China) has also contributed to the decision of some companies to lower their prices in order to stay competitive in the market and increase sales. Xiaomi has been able to keep its prices down and virtually own most of the smartphone market in China by doing online-sales only and narrowing it range of products. Xiaomi has been so successful using these marketing tactics that other big players in the smartphone market have had to react to stay competitive. One of these smartphone giants is the South Korean company Samsung. According to the article their mobile division plunged 62%. To combat this, Samsung has had to lower prices on their phones to stay relevant in the Chinese market and others.
The only outlier in the smartphone market is Apple. Apple continues to make smartphones at a very high price, even in countries where they have low income. They have been able to this by maintaining their status as a luxury good. In a sense apple is not selling smartphones, but instead a luxury item. The article even goes as far east to say that in China, Apple is the “most frequently given gift” even toppling luxury brands such as Louis Vuitton, Gucci, and Chanel. The demand for Apple products continue to grow (and will most likely not change any time soon) but also as more people reach a middle class status, products and smartphones such as that of Xiaomi will continue to grow and play a bigger part in the global market. Other smartphone companies such Samsung will also be affected by the growing economic income, and will either have to rebrand itself as a luxury good and try to compete with apple, or continue to lower prices and split the market with Xiaomi and other smartphone companies.
One of the things brought up by the presentation group was if Xiaomi was simply a copy cat of Apple, and while their design, labeling, product naming, and even some software similarities, they really differentiate