Xiaomi eyes offline expansion

Chinese smartphone vendor Xiaomi Corp unveiled a new smartphone with China Mobile Communications Corp on Thursday, as the company steps up efforts to expand offline retailing channels.

China Mobile, the country’s largest telecom mobile carrier by subscribers, said it hopes to sell 30 million Xiaomi handsets this year, signaling a boost for Xiaomi, which is wrestling with declining shipments and mounting competition from rivals such as Huawei Technologies Co Ltd.

Priced from 899 yuan ($136), the new phone, the Redmi Note 4, will be on sale at China Mobile’s 20,000 offline stores and more than 100,000 bricks-and-mortar retailing partners’ stores.

Lei Jun, CEO of Xiaomi, said the company has sold more than 110 million smartphones under Redmi, a brand known for its cost-effectiveness. “The new phone is our latest effort to offer a quality smartphone that everyone can buy.”

The move came as China’s online smartphone sales hit a ceiling, and market players are banking on bricks-and-mortar retail partners for growth.

James Yan, research director at Counterpoint Technology Market Research, said it is highly possible to achieve the sales target, given China Mobile’s sprawling offline presence.

“Telecom operators’ retail channels account for 30 percent of China’s total smartphone sales, and more than half of that are handled by China Mobile,” Yan said.

The new phone’s good design and sophisticated body, better than most of Xiaomi’s previous phones, will also help boost sales. And the Beijing-based firm’s supply chain partner Wingtech Group is able to ensure an abundant supply of the new phone, he added.

In 2015, China Mobile and Xiaomi jointly unveiled a smartphone called Redmi Note, whose total sales volume hit 27.5 million units, but that happened when Xiaomi was growing rapidly.

The partnership between Xiaomi and China Mobile will also be expanded to Southeast Asia, as China’s smartphone market is reaching saturation point and local players are eyeing overseas markets for opportunities.

Li Huidi, vice-president of China Mobile, said the company is making investments in India and Southeast Asian counties where Xiaomi has established a presence.

“We will partner with hardware vendors such as Xiaomi to bring more domestic devices to overseas markets,” Li added.

He did not disclose details, but analysts said it is likely for China Mobile to leverage its overseas investments or foreign partners to build retail channels for Chinese handsets.