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Xiaomi Looking to Internet to Boost Sales Even Further in Hungary

Telco

Andrew Wong

Chinese multinational electronics company Xiaomi, headquartered in Beijing, has made huge strides since it was founded in April 2010. Andrew Wong, its general manager for Central and Eastern Europe, Nordics and Baltics, talks exclusively to the Budapest Business Journal about what is driving sales, not least here in Hungary.

BBJ: Last year’s overall mobile phone sales figures worldwide were not too bright. Following a decrease in YOY in Q1, in Q2 the trend continued, with 20% less devices sold. Despite that, Xiaomi managed to grow. Do you expect the global trends to impact your sales in Q1/Q2 2021?

Andrew Wong: In 2020, despite the impact of COVID-19 and great global uncertainties, Xiaomi’s diversified business ecosystem demonstrated its resilience, as both revenue and adjusted profits beat market consensus, while our operations continued to expand. I’m confident that our sales will continue to grow in 2021 as we are making all efforts to keep our momentum.

BBJ: With a fierce competition on the market, what is it that differentiates Xiaomi from others? Do you have studies on why customers choose Xiaomi smartphones?

AW: The price-value ratio is the key differentiator. We focus on advancements that offer real added value to consumers. Turning our profits back into such developments makes it possible to deliver products incorporating the highest levels of know-how and technology in a given price category.

Our strength lies in the mid-range price category, represented by the various devices in the Redmi Note series, whose product line is among Xiaomi’s most popular.

The introduction of the Mi 10T series in the Hungarian and European markets signals our entry into the upper category segment. We are making great efforts to give Xiaomi in high-end positioning. As I see it, we have managed to introduce price-competitive products to the upper tier, showing it is possible to buy a device with excellent technical parameters at a consumer-friendly price.

BBJ: As a regional manager, you have a broader perspective on customer preferences across several countries. What are the peculiarities of the Hungarian market or customers vs. Romania, Czech Republic, Slovakia etc?

AW: The Hungarian market is driven by service providers: 80% of mobile phones are sold through Telekom, Telenor and Vodafone. Hungarian consumers are still quite conservative in terms of online purchases, with internet purchases accounting for less than 20% of total sales in Hungary.

Xiaomi is quite strong in e-commerce, so we are considering how to strengthen our internet channel for mobile phone sales in Hungary. Recently, the Hungarian mobile market has stagnated, with sales estimated at only 2.4 million units per year.

Our growth is not only attributable to market growth, but also to the dynamic growth of the Xiaomi ecosystem, which is built on multiple products and software solutions. As a result, we’ve been able to cut an ever-increasing piece of the pie for ourselves. I expect further expansion of our share of the Hungarian market in the fourth quarter.

BBJ: What are the main features that customers are looking for in a mobile phone? What are the main reasons for changing a phone (apart from breaking, scratching etc)?

AW: Xiaomi sees a huge opportunity in 5G devices, as the company is a trailblazer in democratizing new technologies that are relatively expensive and bringing them to market quickly and at an affordable price. We have now released 5G phones that are 40% cheaper compared to our competitors’ units, with the goal of making this new technology more accessible to users.

BBJ: Xiaomi has a product range that spans everything from mobile phones to all manner of smart devices imaginable. What categories are proving a success in Hungary?

AW: We have just begun distributing televisions in Hungary, and would like to move even further into that direction this year with more types and product ranges. Worldwide, wearable bands, electric scooters, and robot vacuum cleaners are popular, from which overseas revenue surpassed that from mainland China in the third quarter of 2020. At present, 289.5 million Xiaomi Internet of Things (IoT) products are connected to our IoT platform worldwide. In retrospect, Xiaomi did not burst onto the scene in Hungary with phones, but with IoT products that were imported by wholesalers, which was an important step in building brand awareness. We would also like to import routers to Hungary, which have not been officially available here so far, as well as Xiaomi’s own brand-name smartwatch.

BBJ: How do you think smartphones will evolve over the next five years?

AW: Smartphones with touch screens and apps will continue to dominate the phone market for a long time to come; I can’t even imagine what could replace them. It is conceivable that, one day, bioelectronics will evolve to such an extent that we no longer have to touch the display, but will be able to control a device mentally, but that is not a technology that we’ll see tomorrow.

BBJ: In terms of global market share, Xiaomi is fourth. Is there room for Xiaomi to grow here?

AW: According to the Q4 report of IDC, Canalys, and Counterpoint, we are in third place in the global smartphone market, and in the CEE region we have now reached first place, based on the latest market analysis of Canalys. We will continue to take advantage of the internet business mode, as well as adapt to the local customs and purchasing habits in Central and Eastern Europe, to consolidate both online and offline sales channels, and diversify our product portfolios to fulfill the increasing demands for Xiaomi’s innovative products with affordable prices.

This article was first published in the Budapest Business Journal print issue of  March 12, 2021.

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