A Curious Look at China's Xiaomi Defeating Samsung and Apple in the Smartphone Market

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Xiaomi Planet

Is China truly an even bigger awakened dragon? A bit of the history of Deng Xiaoping's economic reforms had transformed China from an impoverished communist state into a glorious one. Though, one can say China isn't really communist anymore as it has abandoned the traditional model of Karl Marx and Mao Zedong. Instead, Deng opted for what he called "socialism with Chinese characteristics". Who would have thought that Deng's economic reforms would create a raging dragon out of China in the world of economics? This would probably be true as new Chinese products are soaring in the world. There's Huawei and there's Xiaomi. You may now be wearing a Mi-Band and be using a POCO Phone--both products by Xiaomi. 

It's no secret that Samsung once defeated Apple. Apple is pretty much a high-end phone. Having an Apple means having a high-en phone which, like a Mercedes Benz or BMW, is more of a status symbol. However, Samsung managed to produce some cool phones over Apple last 2012. I may usually tend to spend a little more. However, I think about how I didn't spend much to fix my Samsung laptop (which I'm planning to replace soon with a newer model) last 2012 in contrast to what if I got an Apple MacPRO. It made me think of how I lost an iPod and never wanted another again due to how much it cost. Having two Samsung phones made me think of how much it was better than an iPhone. I didn't have to spend much. Though, my second Samsung phone finally got busted (fortunately, before Odette) and I got a POCO M4 Pro 5G phone in its place. 

So, it turns out that Xiaomi actually managed to defeat both Apple and Samsung. What's there to love about Xiaomi? I thought of a Rappler article in which Kyle Chua talks about the reasons to love the Xiaomi Redmi. The reasons are as follows-- (1) unbeatable price, (2) immersive display, (3) longer lasting battery, (4) functional and fashionable design, and (5) stellar camera performance. In the 4Ps analysis of business--we have (1) product, (2) price, (3) place, and (4) promotion. The product in itself has good specs and the price is a competitive advantage. Who wouldn't want to get more for less, right?  

I was thinking about reading why the iPhone sucks. I think about how it doesn't bother me when people have an iPhone while I had a Samsung. It's because I didn't spend much on my laptop repairs and I think I won't mind getting a higher Samsung or Xiaomi laptop to replace it soon. One of the biggest problems I have with Apple products is the high cost. One reason why I would never want a Mercedes, BMW, or Limousine is because of the high cost of maintenance. It's very much unlike having a Toyota to which I didn't spend much for the labor. Even better, I could get a fancy Toyota VIOS that looks rather expensive that a distance for less. I wonder how true it was that a brand new iPhone-X allegedly had bugs upon its new release. It ends up more like a status symbol. It reminds me of how a Mercedes Benz, once it gets a dent, it would be very expensive to fix it in contrast to a Toyota. I would have the same problem with the iPhone. So, why would I get an iPhone, right? That's why I chose Samsung. Besides, one may have an iPhone but have no ipon (Tagalog for savings) or a BMW but they're BWM (broke without money). 

It seems that Xiaomi has managed to have advantages over Samsung. I was thinking of buying a rather expensive Samsung which was the Galaxy S21 Ultra. The current costs range from PHP 40,000+ to PHP 70,000+ last I checked. Meanwhile, I purchased my POCO M4 Pro 5G for an estimate of PHP 12,490.00. Anybody who wants a cool phone for less. My dream phone would probably cost more and be so painful if ever it was damaged. Besides, good battery life is absolutely an advantage in the product. One reason why I wanted a new phone was that my second Samsung phone's battery was practically coming to an end. Then, that second hand Galaxy S7 phone reached its inevitable end. Why would I settle for pricy Samsung phones when the Xiaomi phones cost less and can give me a good performance? 

What makes Samsung phones more costly than Xiaomi? The reasons would be as follows--(1) billions are spent on Research & Development, (2) Samsung's manufacturing areas cost more than Xiaomi's which is in China, (3) it's said Samsung has better hardware, (4) Samsung spends more for advertising, (5) Samsung has more channels which increase the cost of selling, (6) Samsung has many overhead costs which add to the overall product cost, (7) Samsung reiterates its phone yearly causing even more expenses, (8) Samsung doesn't collect user data (no ads), and (9) Samsung has a lot of service centers which makes it even more costly. So, Xiaomi has the competitive advantage where people who belong to the working class to the middle class will prefer Xiaomi over Samsung. 

Pretty much, the advantage Xiaomi has managed to outdo the two major rivals--Samsung and Apple. Samsung did manage to beat Apple with an advantage over price. However, Samsung has one downside in spite of its good reputation--the cost. Sometimes, you need to be able to make more profit at a lower price to survive in the business world. Cost is a very huge advantage too. If you can offer a good product for less then you can certainly dominate the lower and middle class.

Besides, Porter's Five Forces would talk about these factors--(1) level of supplier power, (2) intensity of the competitive landscape, (3) threat of new entrants, (4) threat of substitute products, and (5) buyer's entry/exit costs. Xiaomi understood the competitive landscape with Apple and Samsung. Samsung defeated Apple in those areas. Now, it was time for Xiaomi to become a threat as a new entrant and a substitute product against Samsung. Samsung would have to deal that it has more expensive phones which might limit the coverage in contrast to Xiaomi. Xiaomi manages to have the level of supplier power which also helped in its being a new entrant and a substitute product. Samsung had the five forces to defeat Apple. Now, Xiaomi would have the five forces that helped it gain an advantage over Samsung.

References

"5 things we love about the Xiaomi Redmi 9A and Redmi 9C" by Kyle Chua (May 21, 2021)

"China’s Xiaomi overtook Samsung and Apple in June smartphones sales" by Saheli Roy Choudhury (August 5, 2021)

"Samsung beat Apple in 2012 PC, tablet and smartphone sales" by Michael Rougeau (February 22, 2013)

"Top 9 Reasons Why The iPhone Sucks" by Diekola Yusuf (November 6, 2020)

"Why are Samsung phones costly than Xiaomi?"

"Xiaomi vs Samsung. Which one is better?" by Mauricio Hernaski (August 6, 2020, updated on November 14, 2021)

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