Xiaomi Phones - Entry into Thailand Market
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Xiaomi Phones - Entry into Thailand Market

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Xiaomi Phones - Entry into Thailand Market Xiaomi Phones - Entry into Thailand Market Presentation Transcript

  • Xiaomi Smartphones Entry into the Thailand market
  • Agenda  Company Background  Country Analysis  Industry Analysis  Recommendations and Five-Year Action Plan  Conclusion Introduction
  • Company Background Our philosophy and products
  • Our Company Founded in 2010 in China One of the fastest growing online-based companies in the world We stand for Innovation. Efficiency. Freedom. Introduction
  • Our Company Mi Smartphones MIUI MiChat •  Medium-price •  High performance •  Operating system for Mi phones •  Android-based •  Voice chat and instant messaging mobile app
  • Introduction Xiaomi phones are “Born to inspire mania” With 2 million fans all over China, the Xiaomi craze is a nation-wide phenomenon.
  • Introduction Xiaomi phones are sold out 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.
  • The Mi-2 phone: Flair and Functionality 4.3 inch display 720p gapless IPS display 1.5GHz Quadcore chip 2 GB RAM
  • The Mi-2 phone: Flair and Functionality iOS style homescreen Voice Assistant Panorama mode for camera 1080p HD video taking
  • The Mi-2 phone: Flair and Functionality Music Player with automatic search for synchronized lyrics New style home screen – Study Room & Angry Birds theme
  • So Many Features… But sold only for RMB 1999! “More for less” pricing strategy captures middle segment
  • Introduction People are the most 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.”
  • Social media: Costless hype machine Each weibo message has over 1 million views and 30k shares! Social media is an extremely cost- effective medium for wide spread hype.
  • Exclusivity: Uniqueness with affordability Phones are 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.
  • User Engagement: Community breeds loyalty 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.
  • Valuation: Full investor c0nfidence 3 rounds of funds raising from international investors Valued at USD 4 Billion! (Blackberry: 5.4 Billion)
  • Introduction Why Xiaomi? Wide acclaim and huge sales success in home country means the product has potential Fierce domestic competition drives the search for foreign markets to diversify risk
  • Introduction Why Thailand? Low cost and low barriers of entry in Thailand High demand for smartphones with relatively low penetration rate (27%) presents ample opportunities
  • Country Analysis What are the risks involved in doing business in Thailand?
  • Situation Analysis Geographical Environment Central Thailand •  Fertile area •  Dense population •  Metropolitan Bangkok Eastern, southern and northern Thailand •  Mountain areas •  Forestry area •  Natural resources •  Mining, rice cultivation
  • Situation Analysis Economic Environment Placed 60th 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
  • Smart Phone Xiao Mi (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.
  • Introduction Trade Environment “Ease of doing 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.
  • Social & Cultural Environment
  • Social & Cultural Environment
  • Social & Cultural Environment
  • Political & Legal Environment Instability Red shirts vs. Yellow shirts Deteriorating health of the KIng Frequent military coups Inherent instability in the South
  • Political & Legal Environment Thailand was ranked as the 5th most corrupt country among the 16 Asia-Pacific economies. Bribing becomes a direct cost for businesses.
  • Industry Analysis The competitive landscape in China and Thailand
  • 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
  • Competitive Advantages Veteran experts from Google, Microsoft and Motorola  clear vision and technical know-how Elimination of channel costs  lower price High performance at attractive low price
  • Competitive Disadvantages Single sales mode 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
  • Introduction Industry Background - Thailand Overall mobile phone market: rose by 9% Feature phone market: dropped by 5% Smartphone market: rose by 85% Rapid growth in Mobile phone market
  • 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
  • Industry Background - Thailand New 3G 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
  • Industry Background - Thailand
  • Competitors Analysis 49% 15% 10% 7% 5% 3% 2% 2% 1% 6% Overall handset 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
  • Competitive Advantages Focus on development of hardware + software Acquisition of startup software companies eg. Duokan Abundant investment from foreign investors High performance at attractive low price
  • Competitive Disadvantages Relatively short development time 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
  • Recommendations Our five-year plan to expand into Thailand
  • 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”
  • Target Smart phone enthusiasts Low Production cost Distribution cost Marketing cost High Performance Specifications Innovation Value Proposition
  • Positioning Expensive Cheap Innovative mobile Internet functions Traditional feature 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
  • 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
  • Conclusion Is going to enter 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.
  • Thank You!