Xiomi and Tesco Internationalization Strategy

Xiaomi and Tesco

- Internationalization Strategies -

Xiaomi and Tesco- Internationalization Strategies

1. How has distance impacted each company’s record of success/failure?

Xiaomi- Since its creation, Xiaomi was supposed to develop and sell software for use with android platform phones, it evolved into an internet and ecommerce company that manufactures smartphones. At only 6 years old Xiaomi has grown to become the 3rd largest cell phone producer, right behind Apple, and Samsung. Through innovative marketing and distribution Xiaomi disrupted China’s smartphone Industry.

Lei Jun surrounded himself with a strong team of executives, who have been able to grow Xiaomi from software, to high quality, low cost cellphones with extraordinary customer service. Most of their market share has come from extremely aggressive price points, they are at about half the price of an Iphone and Samsung, with the same if not better qualifications.

Xiaomi diversified by selling smartphones, and smartphone products such as tablets and wearables(watches). Created Mi pad, the flagship Mi phone, and through intense customer engagement and market probing created Mi fans, Perhaps the strongest cultural following for a smartphone company.

Successes- Extreme success in China, Taiwan, Hong Kong, Singapore, Malaysia, Philippines, Indonesia & India. Xiaomi’s founder and CEO Lei Jun was at a crossroads: did his company have the technological advances to go head-to head with the smart phone giant’s Apple and Samsung?

In India, Xiaomi became such a large success due to internet sales, from 20 to 25 percent of all India’s sales. In Singapore and Malaysia, partner relationships with UBER taxi app allowed Xiaomi to use Uber as a distribution channel, and a means of delivery for the customers. Following the CAGE strategies outlined in Pankaj’s article - Xiaomi quickly spread into neighboring Asian nations (Regional expansion). Here the distance actually worked in favor of the emerging multinational as Xiaomi shortens its procurement process and lowers its procurement process and costs by sourcing all components in the Asia Pacific region. Therefore it made sense to sell the phones in countries that are geographically close to China and could easily be transported by sea to neighboring countries.

Brazil- Xiaomi introduced internet purchasing, and has started selling smart-phones at half the price of competitors. Brazil is a very price sensitive market and they have partnered with OEM to manufacture their phones in Latin America.

Many EM MNEs, especially those producing technologically standardized products, are more dependent on global export markets and more likely to use export intermediaries and distributors to reach foreign consumers than their competitors.(Luo)

Failures- Some of the greatest challenges Xiaomi faces is in their home market of China, where competition in the smartphone industry is intense. There is still no indication of what Apple or Samsung will do to hinder a global expansion to more advanced markets such as USA, UK, and Japan.