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Xiaomi Phones - Entry into Thailand Market
- 1. Xiaomi Smartphones Entry intothe Thailand market
- 2. Agenda Company Background Country Analysis IndustryAnalysis Recommendations and Five-Year Action Plan Conclusion Introduction
- 3. Company Background Our philosophyand products
- 4. Our Company Founded in2010 in China One of the fastest growing online-based companies in the world We stand for Innovation. Efficiency. Freedom. Introduction
- 5. Our Company Mi Smartphones MIUI MiChat • Medium-price • High performance • Operating system for Mi phones • Android-based • Voice chat and instant messaging mobile app
- 6. Introduction Xiaomi phones are “Bornto inspire mania” With 2 million fans all over China, the Xiaomi craze is a nation-wide phenomenon.
- 7. Introduction Xiaomi phones are soldout 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.
- 8. The Mi-2 phone: Flairand Functionality 4.3 inch display 720p gapless IPS display 1.5GHz Quadcore chip 2 GB RAM
- 9. The Mi-2 phone: Flairand Functionality iOS style homescreen Voice Assistant Panorama mode for camera 1080p HD video taking
- 10. The Mi-2 phone: Flairand Functionality Music Player with automatic search for synchronized lyrics New style home screen – Study Room & Angry Birds theme
- 11. So Many Features… Butsold only for RMB 1999! “More for less” pricing strategy captures middle segment
- 12. Introduction People are themost 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.”
- 13. Social media: Costless hypemachine Each weibo message has over 1 million views and 30k shares! Social media is an extremely cost- effective medium for wide spread hype.
- 14. Exclusivity: Uniqueness with affordability Phonesare 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.
- 15. User Engagement: Community breedsloyalty 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.
- 16. Valuation: Full investor c0nfidence 3rounds of funds raising from international investors Valued at USD 4 Billion! (Blackberry: 5.4 Billion)
- 17. Introduction Why Xiaomi? Wide acclaimand huge sales success in home country means the product has potential Fierce domestic competition drives the search for foreign markets to diversify risk
- 18. Introduction Why Thailand? Low costand low barriers of entry in Thailand High demand for smartphones with relatively low penetration rate (27%) presents ample opportunities
- 19. Country Analysis What arethe risks involved in doing business in Thailand?
- 20. Situation Analysis Geographical Environment CentralThailand • Fertile area • Dense population • Metropolitan Bangkok Eastern, southern and northern Thailand • Mountain areas • Forestry area • Natural resources • Mining, rice cultivation
- 21. Situation Analysis Economic Environment Placed60th 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
- 22. Smart Phone XiaoMi (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.
- 23. Introduction Trade Environment “Ease ofdoing 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.
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- 27. Political & Legal Environment Instability Redshirts vs. Yellow shirts Deteriorating health of the KIng Frequent military coups Inherent instability in the South
- 28. Political & Legal Environment Thailandwas ranked as the 5th most corrupt country among the 16 Asia-Pacific economies. Bribing becomes a direct cost for businesses.
- 29. Industry Analysis The competitivelandscape in China and Thailand
- 30. 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
- 31. Competitive Advantages Veteran expertsfrom Google, Microsoft and Motorola clear vision and technical know-how Elimination of channel costs lower price High performance at attractive low price
- 32. Competitive Disadvantages Single salesmode 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
- 33. Introduction Industry Background - Thailand Overallmobile phone market: rose by 9% Feature phone market: dropped by 5% Smartphone market: rose by 85% Rapid growth in Mobile phone market
- 34. 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
- 35. Industry Background - Thailand New3G 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
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- 37. Competitors Analysis 49% 15% 10% 7% 5% 3% 2% 2% 1% 6% Overallhandset 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
- 38. Competitive Advantages Focus ondevelopment of hardware + software Acquisition of startup software companies eg. Duokan Abundant investment from foreign investors High performance at attractive low price
- 39. Competitive Disadvantages Relatively short developmenttime 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
- 40. Recommendations Our five-year planto expand into Thailand
- 41. 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”
- 42. Target Smart phone enthusiasts Low Productioncost Distribution cost Marketing cost High Performance Specifications Innovation Value Proposition
- 43. Positioning Expensive Cheap Innovative mobile Internet functions Traditionalfeature 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
- 44. 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
- 45. Conclusion Is going toenter 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.
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