Xiaomi teams up with China Unicom to boost offline sales

Chinese smartphone vendor Xiaomi Corp has teamed up with the country’s second-largesttelecom carrier, China United Network Communications Group Co, to expand its offlineretailing channels.

The move came as the country’s online smartphone sales has hit a ceiling and as Xiaomigrapples with declining shipments and mounting competition from rivals such as OppoElectronics Corp.

Xiaomi launched a custom-made smartphone Redmi 3X on Wednesday. Equipped with alarge battery and a 13-megapixel rear-camera, the new phone will go on sale for 899 yuan($136) through China Unicom’s 30,000 offline stores and more than 230,000 bricks-and-mortar retailing partners.

Lei Jun, CEO and founder of Xiaomi, said so far more than two-thirds of the company’ssmartphones have been sold through e-commerce platforms and the company’s officialwebsite.

“The proportion of online sales is too big,” Lei said. “To maintain the rapid growth we haveseen in the past four years, expanding offline retailing channels becomes the key.”

Xiaomi and China Unicom will also expand their cooperation beyond handsets to a widerange of products, such as Xiaomi TV, routers and air purifiers.

“All of these Xiaomi electronic products will be available at our nationwide offline retail stores,”said Xiong Yu, deputy general manager at China Unicom.

The move fits into China Unicom’s broad efforts to transform its abundant bricks-and-mortarassets into a big retailing platform of various electronic products, Xiong added.

As China’s smartphone market is reaching saturation point, a number of vendors are bankingon bricks-and-mortar retailers to spur their growth.

Xiaomi said earlier this year it will open 200 to 300 retail stores to bolster sales. Its major rivalLenovo Group Ltd also pledged more efforts to expand its offline retailing presence, which itssenior Vice-President Chen Xudong called the key to surviving intense competition.

CK Lu, principal analyst at consulting firm Gartner Inc, said China Unicom’s sprawling offlineresources gave Xiaomi a ticket to enter into low-tier cities, which are dominated by its rivalsOppo Electronics Corp and vivo Mobile Communication Technology Co Ltd.

In the first quarter of this year, Oppo and vivo made their way into the world’s top-five rankingof smartphone vendors for the first time, pushing out Xiaomi and Lenovo.

“Xiaomi is an expert in online marketing, but lacks experience and talent to run offline stores.So it makes tons of sense to partner with China Unicom,” Lu said.

According to Counterpoint Technology Market Research, telecom operators’ retail channelsaccount for 30 percent of China’s total smartphone sales, while e-commerce sites contributeanother 30 percent, with the rest managed by professional electronic retail stores.

James Yan, a Beijing-based analyst at Counterpoint, said partnering with China Unicom willhelp Xiaomi quickly boost smartphone sales, but won’t necessarily deliver good profits.