Replenish supply chain and compete with high-end millet to expand overseas market share

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Author: LV Qian
[at present, Xiaomi mobile phone is walking on two legs with high-end machine and low-end machine, and the latter obviously accounts for a larger proportion. Futu investment research team said that although the sales volume of Xiaomi mobile phones decreased in the second quarter, the revenue increased because the proportion of medium and high-end models sold increased. The average price of the company’s mobile phones reached 1116.3 yuan in the second quarter, with a month on month increase of 7.5% and a year-on-year increase of 11.8%. ]
[in the third quarter of 2020, Xiaomi mobile phone ranks the third in the global smartphone shipment, surpassing apple, and the market share of Xiaomi mobile phone rises to 13% from about 10% in the last quarter. ]
[in the second quarter of 2020, the overseas market revenue of millet will reach 24 billion yuan, with a year-on-year growth of 10%, accounting for 44.9% of the total revenue. ]
According to Xiaomi company, from November 1 to November 11 at 3:25 a.m., the total amount of new retail Omni channel payment in Xiaomi China exceeded 10 billion yuan. At the same time, other achievements and new targets of Xiaomi mobile phone are also remarkable – its market value stands at HK $600 billion, ranking the third in the world in terms of mobile phone shipment in the third quarter of 2020. Lei Jun, chairman and CEO of Xiaomi, said that he would rank first in Europe in the next few years.
However, behind the appearance of the market is the complex international changes, the market share vacated by competitors and friends, and the growing demand for online e-commerce shopping. IDC released the global smartphone market shipment data in the third quarter of 2020, showing that the total global smartphone shipment was 353.6 million units, a year-on-year decrease of 1.3%. The epidemic has brought great changes to the mobile phone industry and the corresponding industrial chain. Xiaomi still has a long way to go if it wants to achieve the established goals.
Shipment volume exceeds apple
On October 30, the statistical data released by IDC and canalys, two major market research institutions, showed that Xiaomi mobile phone ranked the third in global smartphone shipment in the third quarter of 2020, surpassing Apple’s, and the market share of Xiaomi mobile phone increased from about 10% in the previous quarter to 13%.
In line with the current situation, Lei Jun said at the millet developers conference that Xiaomi’s goal is to rank first in Europe in the next few years. He stressed that in the future, Xiaomi will continue to increase R & D investment. At present, Xiaomi has more than 10000 R & D personnel and will recruit 5000 engineers in 2021. The ten key areas to be recruited include: camera imaging technology, screen display technology, fast charging and wireless charging technology, lot platform and connection technology, AI and voice intelligent interaction technology, 5g and 6G communication standard technology, big data and cloud Service technology, audio technology, information and process management system technology, intelligent manufacturing equipment and system integration technology.
In the face of the international market share opportunities, many mobile phone manufacturers aim at Europe. According to the Research Report of Puyin international, from the perspective of supply chain, the demand for smart phones in Europe is steadily returning to the level close to that before the epidemic, and the next battlefield for Chinese brands is Europe. Xiaomi can enter the European market with excellent products, online brand building, Xiaomi home and IOT products, while ov is good at defining products and building brand power through marketing.
Puyin international expects that in 2024, China’s five major brands will take 54% of the global market share. This process will lead to the demise of overseas small brands and the loss of part of Samsung’s share.
Sun Yanbiao, President of the first mobile phone industry research institute, told the first finance and economics reporter that Xiaomi mobile phone’s outstanding achievements this year come from many aspects. The biggest advantage is its Internet gene. The epidemic situation has stimulated the demand for online shopping all over the world. In particular, the proportion of e-commerce shopping in the United States and Europe has increased significantly, among which Xiaomi mobile phone occupies a large share.
Secondly, the Xiaomi intelligent project that Lei Jun wants to build is similar to Huawei’s Songshan Lake production line, which is an important cornerstone of Xiaomi’s impact on the European market. At present, Xiaomi has built its first intelligent factory in Yizhuang, Beijing. The next planned intelligent factory will cover an area of 1600 square meters and have a fully automated production line. Lei Jun said that at present, China is facing an extremely complex international environment. If enterprises want to achieve a breakthrough, they must choose the path of intelligent manufacturing.
Supply chain short board
Apple, which has opened a golden decade for smart phones, is still the most important competitor for Chinese brands both at home and abroad.
For Xiaomi, the domestic mobile phone market competition environment has become more intense due to the impact of the global epidemic. According to the Research Report of Puyin international industry, apple mobile phone, after occupying the high-end market, has increased its online layout through cooperation with tmall and Jingdong, and deployed the mid-end market through more model releases.
In the face of complex international situation and geopolitical issues, Lei Jun once revealed that Xiaomi has determined three development principles: first, it is necessary to “knock on” China region, do a good job in China’s business, and promote the further development of the whole Chinese business; second, we should unswervingly globalize, and the goal is to rank first in Europe in the next few years, which proves that Xiaomi can also achieve globalization in developed countries Thirdly, we should pursue localization in globalization.
Since 2014, Xiaomi’s real large-scale overseas expansion began after 2016. Lei Jun personally took charge of the mobile phone business and established the “three high” strategy of high-end market, high-end flagship and high-end operators. Zeng Xuezhong, vice president of Xiaomi group and President of mobile phone department, said that European market is the world’s top market next to North America. This market still has a cognitive process for non apple and Samsung products, and the key to cognition is to look at the products.
When Xiaomi made an internal review, it was found that: Europe is a place where there are more rice noodles. Since the generation of Xiaomi MIUI, there have been rice noodles in Europe, Italy and Spain. They have replaced their original mobile phones with MIUI, and gradually become loyal promoters, users and even employees of Xiaomi company. At the same time, Xiaomi constantly introduced global talents, and began to use local talents in Spain, Italy, France, Germany and other places. Zeng Xuezhong attributed the core reason of Millet’s gradual rise in Europe to “millet cost performance”.

Zeng Xuezhong told the first finance and economics reporter that Xiaomi had suffered losses in the supply chain at home and abroad. Before 2016, the supply chain was basically based on software R & D and management mode, and his understanding of hardware mode was not so strong. Only after taking over the supply chain in 2016 did Leijun increase its investment in the supply chain.
Zeng also believes that future growth depends heavily on cooperation with core suppliers. The success of Apple mobile phone lies in Cook’s supply chain background. He cooperates deeply with core suppliers to jointly carry out research and development technology. Xiaomi is learning from this method.
He further said that only by making up for the short supply chain, Xiaomi’s overseas shipment volume of tens of millions of yuan can be guaranteed. Only in this way can Xiaomi make a breakthrough in key national regions, high-end markets, high-end products and high-end operators. Among them, the high-end operators that sell the largest number of apple and Samsung mobile phones are the most difficult to break through. Xiaomi high-end machine is strengthening its cooperation with it.
Hard nut to crack in high end market
Samsung ranked first with 34% market share, while Xiaomi and apple tied for second place with 19% market share, according to canalys, a research firm. Although in reality, both internal and external factors are favorable to millet in varying degrees, it is not easy to rush to the first place in European market.
In terms of the whole international environment, tiger securities investment research team told reporters from China first finance and economics that the landing of the US election does not mean that it will relax the suppression on China. Xiaomi has not been blacklisted in the United States, but there is still this risk in the future. There are two opportunities for Xiaomi in the international market: one is to continue to expand the market share of Android mobile phones; the other is to feed back the market development of high-end mobile phones through other IOT products, so as to rush to the first place and enter the competition level between IOS and Android systems.
In addition, in the overseas market, Xiaomi mobile phone has made brilliant achievements. According to its financial report data, in the second quarter of 2020, the overseas market revenue of millet reached 24 billion yuan, a year-on-year increase of 10%, accounting for 44.9% of the total revenue. In addition, Xiaomi’s high-end strategy has begun to show results. In the overseas market, the shipment of high-end mobile phones priced at 300 euro or above increased by 99.2% year-on-year in the second quarter, becoming the top three smartphone manufacturers in Europe for the first time, with a market share of 16.8%.
However, it should be noted that, according to the previous public data, the largest market of millet in Western Europe is Spain, and there is still room for development in Germany, Britain and France.
Tiger securities investment research team to the first financial reporter analysis, Xiaomi is also engaged in research and development, and the high-end machine, but the high-end machine may face more competition with apple. If any industry wants to enter the top of the pyramid, either it needs the technology leading the peers, or on the basis of paying attention to functionality, it has a strong brand, cultural and other soft power competitiveness as a moat. Xiaomi can consider launching co branded products with other famous brands not in the same industry to improve brand influence, or enhance soft power by design, experience and other means.
Futu investment research team analyzed the first finance and economics reporter that Xiaomi still needs to make breakthroughs in key markets if it wants to impact the first place in the European market, such as Germany and Italy, which are big economic countries. At present, Xiaomi still ranks fourth in these two countries, and has made great efforts in local cooperation and marketing.
At present, Xiaomi mobile phone is walking on both high-end and low-end machines, and the latter obviously accounts for a larger proportion. Futu investment research team said that although the sales volume of Xiaomi mobile phones decreased in the second quarter, the revenue increased because the proportion of medium and high-end models sold increased. The average price of the company’s mobile phones reached 1116.3 yuan in the second quarter, with a month on month increase of 7.5% and a year-on-year increase of 11.8%. Xiaomi’s dual brand strategy is correct, but the disadvantage is that the pace of entering the high-end market will not be so fast.
It takes money and time to impact high-end products. In terms of capital, the investment of domestic companies, apple and Samsung is not at the same level. Xiaomi spent more than 7 billion yuan on R & D last year, while Apple spent more than 10 billion US dollars a year. In some key links such as CPU and baseband, similar difficulties still exist in the domestic supply chain.
In the current smart phone market where the technology iteration begins to slow down, whether the products can impact the high-end is not only the ability of one enterprise, but the strength of the whole industry chain behind it, especially the R & D strength in key fields. Moreover, it takes time for technology research and development, and it also takes time for technology to be transformed into commercial achievements.
In view of Xiaomi’s goal of hitting the first place in Europe and its development in the field of high-end computers, sun Yanbiao said that it is a normal goal for Xiaomi mobile phones to “sit three times and look at one” in Europe. The key to the competition is to launch high-end star products for five years in a row and to maintain a stable high-end market.