Analysts say fierce competition may hamper future growth
China's smartphone upstart Xiaomi Inc on Thursday reported a 33 percent jump in smartphone sales in the first half of the year, but analysts were skeptical if it will meet its full-year sales target for 2015 due to fierce competition and a market slowdown.
The company's CEO Lei Jun said in his Weibo post that Xiaomi sold 34.7 million handsets during the first six months, up 33 percent year-on-year, raising doubts among analysts over realization of its full-year sales goal.
In March, Xiaomi set a sales target ranging from 80 million to 100 million for 2015, while the company had sold 61.12 million units in the previous year.
"Xiaomi may be able to sell nearly 80 million units this year in part due to the upcoming high sales season during the summer holidays, but it is hard for it to surpass the minimum goal," Wang Yanhui, head of Shanghai-based Mobile China Alliances, told the Global Times Thursday.
The first-half sales figures could have been higher if there was no cut-throat competition from domestic traditional smartphone makers such as Huawei Technologies as well as aggressive rising stars like Meizu and Letv, said Wang.
Adopting the online marketing and distribution model introduced by Xiaomi, Huawei's smartphone sub-brand Honor, launched in October 2014, already sold 20 million units in the first half, according to a Weibo post by the brand on Tuesday. The latest version of the next generation Honor, released on Tuesday, is widely regarded as a promising flagship phone by analysts.
In the first quarter of the year, Xiaomi was ranked by US-based market consultancy IDC as China's second largest smartphone vendor by shipments with 13.7 percent share of the market, closely followed by Huawei with 11.4 percent.
Another arch rival of Xiaomi, Leshi Internet Information and Technology Corp, commonly known as Letv, said at a press conference on Wednesday that it has sold 500,000 self-branded smartphones that were released in April.
In addition to fierce competition, slowing smartphone sales in China are also dampening the prospects of domestic phone brands, Zhang Yi, CEO of Guangzhou-based market research firm iiMedia Research, told the Global Times Thursday.
In the next two to three years, almost every Chinese adult will own at least one smartphone, said Zhang.
A report by IDC in May said that China's first-quarter smartphone shipments dropped 4 percent year-on-year, the first decline in six years.
Against this backdrop, Xiaomi is diversifying its businesses and pumping up efforts in overseas expansion.
In December 2014, Xiaomi inked a partnership with China's leading home appliances maker Midea Group Co to jointly explore opportunities in smart-home sector.
The two partners on Tuesday together released a Wi-Fi-enabled air conditioner, which can be controlled by Xiaomi smart devices.
Xiaomi also has an ambitious plan to expand into the global market.
On Wednesday, Xiaomi announced the introduction of its products into Brazil, after the brand gained some popularity in the Indian market. In less than five months since its entry into India in July 2014, more than 1 million Xiaomi handsets were sold in the market.
But both Zhang and Wang think Xiaomi faces an uphill battle in overseas expansion.
Lack of a rich patent portfolio will hamper Xiaomi's globalization strategy to a certain extent, said Zhang.
"And even if it got into India and Brazil successfully, Xiaomi will need a rather long time to popularize its products compared to companies like Huawei, as the latter, also a telecommunications equipment supplier, has a sound tie-up with local telecom carriers, a key distribution channel for phone makers," Zhang noted.
Wang added that the online sales model is unlikely to be effective in countries like India where logistics and delivery system is immature.
