Abstract
This article conducts the Xiaomi SWOT analysis by identifying the key business strengths, weaknesses, opportunities and threats. The article provides information about Xiaomi’s internal and external business environment. Policy makers and strategists can read the article to gain insights into Xiaomi’s business strategies, and overall industry environment.
Researchers and students can also read the article to know how internal and external environment influences the business strategies of successful brands like Xiaomi in real world.
1. Introduction
In 2021, Xiaomi for the first time surpassed the Apple, and became world’s second largest smartphone manufacturer.
Currently in 2023, the brand currently holds 3rd position in global smartphone market.
In this article, we will learn about the business strategies of Xiaomi in light of SWOT framework. The SWOT Analysis of Xiaomi discusses the internal and external environmental factors that determine the business success.
2. Company Overview
| Company name | Xiaomi Mi |
| Founding year | 2010 |
| CEO | Lei Jun |
| Headquarters | Beijing, China |
| Industry | Consumer electronics |
| Number of countries | 100+ countries |
| Number of employees | 33,427 |
| Revenue 2022 | $40.74 billion |
| Brand value 2023 | $39.82 billion |
Products: Smartphones, laptops, tablets, wearable devices, routers, TVs, and other smart home appliances
Key competitors: Samsung, Apple, OPPO, VIVO
3. Xiaomi SWOT Analysis
3.1. Xiaomi Strengths
Xiaomi holds strong position in the global smartphone market. In 2022, Xiaomi held 11% market share, which made it world’s third largest brand based on smartphone shipments:
Source: Data extracted from Counter Point Research
2. IOT powerhouse
According to Harvard Business Review, Xiaomi has become the world’s largest consumer Internet-of-things (IoT) powerhouse. It has 210 million IoT devices excluding laptops and smartphones; and revenue surpassing $37 billion.
3. Strategic partnerships
Xiaomi Mi has developed valuable strategic partnerships that help brand in fueling the innovation. For instance, Xiaomi partnered with Microsoft in 2018 to take benefit from Microsoft’s leading technologies in AI and cloud computing.
4. Wide market coverage
Xiaomi products are available in more than 100 countries. In 2021, Xiaomi shipped 191 million units, which accounted for approx. 14% of global smartphone shipments, trailing Samsung and Apple.
5. Low cost advantage
One of the core business strength of Xiaomi is its low production cost.
Xiaomi does its manufacturing in China. Low labor cost enables the Xiaomi to charge affordable prices, and still remain profitable.
6. Resilience
Xiaomi has successfully achieved its growth objectives, even in hard times. A 2020 Gartner study revealed that other than Apple and OPPO, Xiaomi was the only brand that showed positive growth during pandemic, while rest of the industry showed a decline:
Source: Gartner PR
7. Most innovative company
A 2022 BCG ranking considered Xiaomi the most innovative company due to its commitment to technological innovation, and enhanced research and development capabilities.
In 2022, Xiaomi invested ¥16 billion, showing around 22.8% increase compared to 2021. In 2023, Xiaomi aims to increase R&D investment to ¥20 billion.
Following graph shows Xiaomi’s R&D expenses (in billion Yuan) from 2017 to 2021:
Source: Statista
8. Supply chain efficiency
Xiaomi has robust supply chain management strategy. It sources material from multiple suppliers which saves it from the supply chain disruptions. Moreover, Xiaomi effectively manages the stock keeping units by introducing minor design changes, and launching models with similar specs under different labels.
3.2. Xiaomi Weaknesses
1. Poor branding
Xiaomi is currently facing brand perception problem. Unlike its competitor OPPO that developed a clear and distinct brand positioning for its premium and affordable brands, Xiaomi has unclear brand positioning.
Its Mi series caters premium segment, and REDMI caters budget conscious segment. However, due to poor branding, customers perceive both as same brand, which hurts the Mi sales despite offering impressive specs.
2. Stalled growth
A 2021 research by Business Wire shows that the Xiaomi growth in global 5G smartphone market has stalled. Honor has started giving tough competition to Xiaomi in China.
Following graph shows the Xiaomi’s stagnant growth from 2016 to 2019:
Source: Statista
3. Poor customer service
A previous research showed that the customers are dissatisfied with the Xiaomi customer service. They complaint that the Xiaomi’s hotline always remains busy, and complaint handling process takes too much time.
4. Poor offline distribution infrastructure
Xiaomi has limited offline distribution channels compared to its competitors due to excessive focus on online sales network. Xiaomi is currently suffering in Indian market due to its online bias.
Xiaomi has 10,000 retail points, 75 Mi Homes and 3000 exclusive Mi stores. However, retailers protested by saying that only official outlets got the Redmi Note 10.
5. Limited marketing budget
Unlike competitors like Apple that invests heavily on emotional branding and storytelling, Xiaomi does not spend adequately on advertising and promotion. The minimalistic advertising initially helped brand. But, as the competition is getting intense, Xiaomi needs to invest on branding and marketing to drive out the competition.
3.3. Xiaomi Opportunities
1. Mobile augmented reality
The mobile augmented reality will appear as a viable commercial opportunity for smartphone manufacturers:
Following graph shows the growth in mobile AR from 2019 to 2024:
Source: Statista
Xiaomi may invest on the specialized head mounted services (like AR glasses) to capture this trend.
2. Premium smartphone market
In 2022, overall global smartphone market experienced a decline of 12% due to economic uncertainty. However, the premium smartphone segment climbed 1%, making 55% contribution to total market revenue.
Xiaomi may consider launching more premium phones to capture this trend, and penetrate deeper into the premium segment.
3. Wearable technologies
As per estimates, global wearable technology market will grow from $121.7 billion (2021) to $392.4 billion (2030):
Source: Precedence Research
In 2023, Xiaomi launched its first ever smartwatch. The brand may invest more on wearable technologies to leverage this opportunity.
4. Cloud segment
The global cloud computing market will grow with an impressive 17.43 CAGR from 2021 to 2030:
Source: Precedence Research
Xiaomi recently limited its cloud storage services by removing the gallery sync feature.
Considering the rise of cloud computing, Xiaomi should revisit this decision, and expand partnership with Google and Microsoft to offer better cloud storage services.
5. Green marketing
Today’s customers, particularly millennials and Gen Z place high importance to sustainability while making purchase decisions. Many smartphone brands like Apple are considering it as an opportunity to reposition themselves as ‘sustainable tech giants’.
Xiaomi should also take it as an opportunity to rebrand itself as a sustainable tech company.
6. Self-driving technology
The self-driving technology trend is on rise. The global autonomous vehicle market will grow with 38.8% CAGR from 2021 to 2030:
Source: Precedence Research
Xiaomi is currently testing its 140 fully autonomous vehicles in China. By learning from Apple-Kia partnership, Xiaomi should expand its autonomous vehicle portfolio, and bring it to the global stage to fully capture this opportunity.
7. Satellite internet
Global satellite internet market will grow with 11.6% CAGR rate:
Source: Research and Markets
Xiaomi, OPPO and Vivo are currently working on the satellite internet to keep pace with this technological development. Considering the growth forecast, Xiaomi should invest more on this venture.
3.4. Xiaomi Threats
1. Slow smartphone market growth
The smartphone market growth has stalled. Analysts are wondering whether the world has passed through the peak of smartphone era:
Source: World Economic Forum
Slow market growth threatens the Xiaomi’s revenue, and compels the brand to diversify its portfolio.
2. Data privacy regulations
Data privacy regulations are getting stringent with time. Xiaomi frequently faces the law suits and allegations for violating the privacy law. In 2022, NCC warned of a privacy threat allegedly planted in Xiaomi’s latest phones.
Such allegations can damage the brand reputation.
3. Fading brand distinction
The brand distinction in the smartphone market is fading with time. The technology is easily imitable, which enables the new smartphone companies to challenge existing brands by offering almost similar features.
4. Rising labor costs in China
China is no longer a ‘low-cost’ country. As per Logistics Management Magazine, the labor rates in China have significantly increased in 2023. It can raise the production cost, and threaten the Xiaomi’s competitive positioning as an affordable smartphone brand.
4. Summary- Xiaomi SWOT Analysis
| Xiaomi strengths • Strong market share • IOT powerhouse • Strategic partnerships • Wide market coverage • Low cost advantage • Resilience • Most innovative company • Supply chain efficiency | Xiaomi weaknesses • Poor branding • Stalled growth • Poor customer service • Limited offline distribution • Limited marketing budget |
| Xiaomi opportunities • Mobile augmented reality • Premium smartphone market growth • Wearable technologies • Cloud segments • Green marketing • Self-driving technology • Satellite internet | Xiaomi threats • Slow smartphone market growth • Data privacy regulations • Fading brand distinction • Rising labor costs in China |
5. Recommendations
Based on SWOT analysis of Xiaomi, the article proposes following recommendations:
• Invest on marketing and branding to develop clear positioning for its affordable and premium brand categories.
• Improve the customer service quality by shortening the complaint handling process.
• Expand the offline distribution infrastructure, and avoid online bias.
• Increase marketing and advertising budget.
• Invest more on mobile augmented reality, self-driving technology, satellite internet, cloud segment and wearable technologies.
• Launch more phones in premium category.
• Improve data privacy policies to win the customer trust.
6. Conclusion
Based on Xiaomi SWOT analysis, the article concludes that Xiaomi is a big player in global smartphone industry. But rising environmental complexity is challenging the Xiaomi’s position in intensively competitive market.
Xiaomi must improve its marketing strategies to leverage the available opportunities, and mitigate the existing threats.
Have a look on Xiaomi marketing strategy article to know more about company’s marketing strategies.
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