Xiaomi moves past struggling Huawei as No 1 Chinese smartphone vendor in global market

Jane Zhang
·4-min read

Xiaomi Corp, backed by 10 years of steady growth, cemented its position as the smartphone industry’s leading Chinese vendor in 2020, when it gained significant market share at home and abroad from US sanctions-hit telecommunications equipment giant Huawei Technologies Co.

“When Huawei was added to the US Entity List in mid-2019, it was the [world’s] second-biggest smartphone maker by volume,” said Fiona Vanier, senior analyst for forecasting at CCS Insight. “By the final quarter of 2020, it had slipped to fourth place and we expect its global market share to keep declining.”

On Wednesday, Xiaomi reported its most profitable year so far on the back of expanded sales and global market share, especially in European countries where Huawei once was the Chinese Android smartphone brand of choice.

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“Xiaomi has definitely taken advantage of Huawei’s difficulties to build global market share,” Vanier said. “In the same period that Huawei slipped from being the world’s second-biggest smartphone maker to [rank as] fourth, we saw Xiaomi increase its market share.”

That rise reflected the aggressive moves made by Xiaomi to compete against Huawei in mainland China and in international markets, where the Shenzhen-based telecoms gear maker has been a strong handset vendor for many years. It has also come amid rival Huawei’s struggles with tightened US trade sanctions.

Xiaomi’s share of the global smartphone market rose to 11.2 per cent in the fourth quarter on total shipments of 43.3 million units, according to data from research firm IDC. That put the company firmly in third place, behind Apple and Samsung Electronics.

While Huawei remained mainland China’s top domestic smartphone vendor in the fourth quarter with a 37 per cent share, Xiaomi still outperformed the market, according to a report by research firm Counterpoint in January. It said Huawei’s growth declined 26 per cent during the period, while Xiaomi was up 15 per cent to hold a 12 per cent share and rank fifth behind Vivo, Oppo and Apple.

Beijing-based Xiaomi’s domestic sales rebounded strongly from the second half of last year on the back of its namesake and Redmi-brand smartphones, according to Counterpoint. Xiaomi also benefited from the weakened performance of Huawei budget brand Honor, which the company sold in November.

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“In 2020, Xiaomi took the right steps to stay competitive in the [domestic] market,” said Will Wong, a Singapore-based analyst at IDC. “The company, for example, actively penetrated the offline market to capture market share from Huawei.”

Xiaomi had more than 3,200 retail stores in mainland China in the three months to December, a net increase of more than 1,000 stores from the previous quarter.

There will be no let-up in that initiative, according to senior management. “We are strategically expanding our retail channel as we seek to cover every county across mainland China,” said Xiaomi president Wang Xiang in a conference call with analysts on Wednesday, following the company’s release of its latest quarterly financial results.

People visit Xiaomi Corp’s store in Kiev, Ukraine, on October 22, 2020. Photo: Reuters
People visit Xiaomi Corp’s store in Kiev, Ukraine, on October 22, 2020. Photo: Reuters

Expansion is also expected to continue in overseas markets, which accounted for 47.9 per cent of Xiaomi’s total US$10.8 billion revenue in the fourth quarter. The company, which sells its products in more than 100 countries and territories worldwide, was ranked among the top five smartphone vendors in 54 countries and regions last quarter, according to research firm Canalys.

Xiaomi, however, still faces plenty of challenges ahead, including geopolitical risks, according to IDC’s Wong. The company, founded by Chinese serial entrepreneur Lei Jun in 2010, was unexpectedly added to the US government’s trade blacklist in January.

“It comes as no surprise that Xiaomi has challenged sanctions [imposed] by the US government in court, and the recent [favourable] ruling is good news,” said Vanier of CCS Insight. “It is hoping to avoid a similar fate as Huawei’s. Given that it is not involved in network infrastructure, we believe it is in a much better position.”

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