ISSN: 2278-3369

International Journal of Advances in Management and Economics

Available online at: www.managementjournal.info

RESEARCH ARTICLE

The Problem Faced and the Solution of Xiaomi Company in India

Li Kai-Sheng

International Business School, Jinan University, Qianshan, Zhuhai, Guangdong, China.

Abstract

This paper mainly talked about the problem faced and the recommend solution of Xiaomi Company in
India. The first two parts are introduction and why Xiaomi targeting at the India respectively. The third
part is the three problems faced when Xiaomi operate on India, first is low brand awareness can’t attract
consumes; second, lack of patent reserves and Standard Essential Patent which result in patent dispute;
at last, the quality problems after-sales service problems which will influence the purchase intention and
word of mouth. The fourth part analysis the cause of the problem by the SWOT analysis of Xiaomi. The
fifth part is the decision criteria and alternative solutions for the problems proposed above. The last part
has described the recommend solution, in short, firstly, make good use of original advantage and increase
the advertising investment in spokesman and TV show; then, in long run, improve the its ability of
research and development; next, increase the number of after-sales service staff and service centers, at
the same, the quality of service; finally, train the local employee accept company’s culture, enhance the
cross-culture management capability of managers, incentive different staff with different programs.

Keywords: Cross-cultural Management, India, Mobile phone, Xiaomi.

Introduction
Xiaomi was founded in 2010 by serial faces different problem inevitably. So, this
entrepreneur Lei Jun, who believes that passage further discus what cause those
high-quality technology doesn't need to cost a problems and how to solve them.
fortune. Create remarkable hardware,
The Reasons for Targeting at the India
software, and internet services for and with
the help of our Mi fans. Xiaomi incorporate In China, except Apple, Samsung, HTC and
Mi fans feedback into their product range, others international well-known band, there
which currently includes the Mi Note Pro, Mi many domestic mobile smartphone band,
Note, Mi 6, Redmi 5, Mix, Mi TV, Mi Band such as the Huawei, Lenovo, Meizu, OPPO
and other accessories. With more than 100 etc. Chinese smart smartphone market had
million handsets sold in 2017, and products become red sea. According the Worldwide
launched in Taiwan, Hong Kong, Singapore, Quarterly Mobile Smartphone Tracker which
Malaysia, Philippines, India, Indonesia and publish by International Data Corporation
Brazil, Xiaomi is expanding its footprint (IDC) ① , the demand of Chinese market
across the world to become a global brand. slowdown significantly, shipments grew up
52.5% in 2013, but 2.5% in 2015, even -12.3%
In recent years, Xiaomi had made great in 2017. So XiaomiCompany’s sales volume
success in China, at the same time, Xiaomi couldn’t keep in high growth as before in
had developing the India market actively, China. In order to make more profit, it must
why the xiaomi company targeting at the for Xiaomi sale its smartphone to other
India market. and in different country, it
①
http://www.idc.com/
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country. There some reasons for target at the now, there is an ongoing smartphone
India. upgrading trend in the Indian markets.
Thence, whether the price or the style
Huge Potential Markets
matches Xiaomi phone perfectly, which
It is widely known that Southeast Asia is the means Xiaomi phone is very promising in this
main driver of global smartphone growth and part of the world.
is a large and fast-Bowing market for mobile
The Problem faced in India
technologies, especially in India. Telecom
Regulatory Authority of India② announced Xiaomihad facing fierce competition in
on December 30, 2015, cellphone user had India.In order to improve its competence,
breakthrough 1 billion, became the second Xiaomi must solve the problem it faced. The
largest cellphone market in the world. major problem of Xiaomi faced as flowed.
Low Brand Awareness
According the reached data from IDC, the
sales volume of cellphone in India reached to The brand awareness is very important for a
111 million, but the percentage of company opera in a new market. Although
smartphone just 15%. Means Indian Xiaomi is very popular and sell well in china,
cellphone market likes Chinese market a few it’s stranger for oversea customer compare to
years ago, there much feature phones will Apple and Samsung, even Huawei. There
replace by smartphones. In the second have several reasons. Firstly, Xiaomi was
quarter of 2016, the sales volume of found in 2010, just 8 years old, it was young
smartphone in India is 2.75 million, growth compare to other vendors.
rate up to 17.1% compare to second quarter of
2015, even growth 3.7% compare to last Secondly, two years ago, most smart
quarter. From the statistics above, the Indian smartphone made by Xiaomi sold in the main
smartphone is a huge potential market. china, didn’t have brand strategy for the
oversea market. Thirdly, the competition of
Similar Demand Preference with
smartphone industry was fierce, there so
Chinese
many smartphone brands and smart
According to statisticsdata from market smartphone’s upgrade quickly year and year,
research GfK, among the seven major all smartphone trends to homogeneity, if
markets, India, Indonesia, Vietnam, want consumer remember your brand, it need
Cambodia, Singapore, Philippines and special characteristic or have famous stars as
Thailand, smartphone volume sales reached spokesman continuity.
415 million units with revenue of $10.8 billion
Lack of Patent Reserves and Standard
and a growth of 61 percent during last year.
Essential Patent (SEP)

That means each smartphone sells at a price From the statistics which State Intellectual
of about $250, which just conforms to the Property Office of the P.R.C③. The patent
market price of Xiaomi smartphone, apply by the Xiaomi company was 7153, but
$100-$300. In addition, India consumers have the number of Huawei’s patent is 77042 and
shown their thirst for high cost performance ZTE is 63707. Maybe this compartment is not
smartphones. Considering the relatively fair for Xiaomi, because Huawei and ZTE
higher price, it should be no surprise that both had built up more than 30 years and
smartphone is not that popular in this region. their main business weren’t smart
Therefore, low cost smartphone with good smartphone. But from the number of patent,
quality and stylish design, are expected to we can find out that Xiaomi’s research and
attract a lot of consumers in India. Especially development is not enough.

② ③
http://www.trai.gov.in/ http://www.sipo.gov.cn

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The most important patent does a has some quality problems, it can’t avoid for
smartphone vendors need is the Standard any vendors. So, another problems arouse,
Essential Patent (SEP), Xiaomi had been that is after-sales service problems.
sued because of this patent. In December 8,
2014, the Delhi High Court of Indian Services refer to labor activities that can
forbidden Xiaomi Company sells xiaomi directly meet consumers' needs and desires
smartphone in India market, because those and are available for sale, which concludes
product infringe wireless technology patent of not only intangible service with no physical
Ericsson Company, this patent belong to the goods but also intangible services with
SEP. physical ones. No longer just limited to mobile
phone's use value, consumers are now more
Ericsson Company doesn’t produce focused on the service that buying products
smartphone, even Xiaomi Company have will bring.
much patent, it can’t struck patent
cross-licensing agreements with Ericsson. All There two after-sales service ways in China,
the company which lack of this patent will consult the customer service of official
face the patent conflict. Most of the way to website and there have service center in
solve the conflict is patent fee. In this event, major city of China, called Mi Home. In India,
Xiaomi and Ericsson made a private there only individual service center, if some
negotiation to mediate the dispute, in hardware needs to be replace, it’s not enough.
December 16, Delhi High Court of Indian had The most of the software problems be solved
dissolute the ban, declared the Xiaomi thought customer service of official website,
Company’s smartphone can sell in India. because of the different language and culture
background, it needs hire local employee to
Quality Problems and After-Sales
solve this problem. In general, pressure of
Service Problems
after-sales service will increase, at the same
In Xiaomi phone forums there are up to 6,000 time, the cost as well.
problems of Xiaomi phone, which mainly
Causes of the Problem
include paint loss, short standby time and
unable to take pictures. This seriously affects Swot Analysis of Xiaomi Company
consumers' satisfaction with Xiaomi phone
Strengths
and, to some extent, influences the
establishment and maintenance of its Effective Team Working among
credibility Co-Founders
Lei Jun, founder of Xiaomi, is chairman of
What must be state again is Xiaomi Company Kingsoft. Lei Jun calls on top players of the
just be found 8 years, its foundation about industry and builds a super-luxury joint
made hardware of smartphones is not solid founding team with eight elite, includes Lin
enough. According to the update of Bin, Li Wanqiang, Zhou Guangping, Wong
smartphones, the new problem of Mi phones Jiangji, Hong Feng, Wang Chuang, Liu De,
also emerges. Except the MIUI system, Mi and Hugo Barra. All co-founders of Xiaomi
phones other hardware was made by other have over 15-years business experience at
manufacture, such as the CPU, most of the both international and domestic first-class
android smartphones use Qualcomm or companies.; at the same time, by relying on
MTK’s CPU. Now, Huawei has its own his good personal relationships, he
CPU--Kirin. As we all know,the fluency of successfully cooperates with Vancl logistics
Android system is worse than apple’s IOS and achieves an exclusive online sale mode;
system. In a word, the quality of smartphones by counting on his powerful celebrity charm,
of xiaomi had improved gradually, but still he successfully fires the opening shot for

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Xiaomi. system has exceeded Apple's IOS and

obtained a market share proportion of 84.6%.
Continuous Upgrading of Core
Android-based games and applications are
Technologies
becoming richer. MIUI, as a heavily
Any mobile phone is not perfect, but for the customized Android operating system, can be
inadequacy the phone need continuous built in thirty or forty mainstream flagship
updates. For example, Xiaomi will release a phones in addition to Xiaomi smartphone,
routine update on every Friday, not only which means that as long as MIUI is good
fixing the former problem but also adding enough, Xiaomi can have a large number of
some useful functions. Continuous iteration customers through refurbishment of
of MIDI and software of Xiaomi is the key to operating system.
arouse public attention, especial MiFans'.
Huge Potentials of Emerging Markets
Weakness
In emerging markets, smartphone growth
Inadequate After-sales Services shows a remarkable opportunity for Xiaomi,
The main after-sales service of Xiaomi although Xiaomi makes wafer-thin margins
includes direct hotline and online customer on devices. However, the vast ecosystem
service. However, according to Internet users, revenues from software, application
Xiaomi's hotline is always too busy and downloads and services are even more
always engaged; online and MIUI community important. As in many emerging markets,
customer service does not do well in solving smartphone is the only or primary Internet
users' problems. Without enough after-sales access apparatus, making it effective to
service center and a lack of employees who influence them through social media and
are skilled in local language in overseas Internet. Marketing through Internet is the
markets, Xiaomi's after-sales service is the thing Xiaomi is extremely adept at.
issue that Xiaomi phone users concern most. Threats
As the quality issues have led to users' hatred
Intensified Market Competition
in many markets outside of China, the
after-sales service of Xiaomi is becoming more Existing competition among enterprises is the
and more serious. most intuitive, most direct and most
important threat factors. Both in the
Weakness in R&D Compared with
international market or domestic market, the
Foreign Competitors
competition between smartphones
Compared with established international manufacturers is fierce. Internationally,
manufacturers and powerful local mobile Apple, Samsung, HTC and LG, are strong
phone vendors in overseas market, Xiaomi is competitor of Xiaomi Company. These
dwarfed. As mobile phone industry is companies are strong in capital and
developing rapidly, the industrial technology, brand recognition, loyal
concentration will become higher. In other customers. Meanwhile, China's domestic
words, just like the household appliance mobile phone brand in these years
industry there are only a few first-class development rapidly, not only a large market
enterprises such as Skyworth, TCL, and share in the domestic market, in the
Hisense left ultimately and participated in international market also has a place, such as
market competition. Huawei ,OPPO, VIVO, and Lenovo.
Opportunities In summary, it is the advantage and
disadvantage of Xiaomi Company that result
Strong Augmentation of MIUI Operation
in the problem above.
System
Decision Criteria and Alternative
Currently in China, Android operating
Solutions

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To solve the three problems that mention and meet Mi Fans' demand of high cost
above. Now, put forward some alternative performance.
solutions follow.
Thirdly, Xiaomi is the first Internet phone
Increase the Brand Awareness
brand: in terms of product level, its
To Increase the Brand Awareness, there innovative mode is "Highest Cost
have Several Alternative Solutions as Performance + Internet Development +
Follow Crafted"; in terms of operation level its
Localize Xiaomi’s core competence in innovative mode is "Internet Marketing +
India.First of all; create operating system Online Sales". For traditional mobile phone
independently for Indian only. In China, the manufacturers, it is an untouchable rule to
operating system of Xiaomi is MIUI; it is a make money through selling hardware.
Chinese customized version of Android
operating system. Although based on Android, Even Apple who does Internet experience
MIUI is very different from Android as it has extremely well also gets considerable profit
a more beautiful interface, a blazing speed, from selling hardware. So at the very
and numerous extra features. MIUI is beginning, Xiaomi, as a pure Internet phone
completely user driven because it updates on brand, did not follow the old path of the
every Friday based mostly on MiFans' domestic mobile phone manufacturers who
suggestions and community input. According mainly profit from quantity but specially
customers’ needs improve user experience, devote itself to developing a single type of cell
have attracted customers and develop its own phone and making it to be a boutique by
fan base.Xiaomi should create an Indian making the best of Internet Marketing mode.
customized version operating system; this
differential strategy must attract Indian Successful experience of Xiaomi in china are
customers. undoubtedly a good reference for other
companies who are about to enter into Indian
Secondly, sells value-for-money products. mobile phone market. Mobile phone makers
From the first-generation Mil in 2011 to Mi6 should not only simply engage in research
in 2017, Xiaomi smartphone always and development, sales and selling mobile
maintains a high cost-effective phones and focus only on product marketing
advantage.Xiaomi’s flagship smartphone through the Internet but also fully
equipped with the world's fastest and most understand users’ needs, create innovations
powerful Qualcomm mobile phone chip which in product details, and improve the user
ensures the fluency and high definition of experience based on customers' needs.
phone system. The workmanship of Xiaomi
phone has reached the standard of some Except the core competence, it’s necessary
international brands such as Motorola and learning from other vendors to enhance brand
Samsung. awareness. In China, the shipments of OPPO
and VIVO had exceeded Xiaomi this year,
The price of$100-$300 is an absolute price advancing to top five around the world.
advantage compared with other peer brands,
which is universally called Xiaomi's According to the analysis report, the main
aggressive price strategy. Separately, each customers of xiaomi focus on who understand
configuration of Xiaomi phone is not the smartphones and the mobile internet user,
necessarily the best but together they show a those people know phone’s chip, screen and
good performance, especially the processor, camera, such as the male students, office
screen and camera which are in full workers at the age from 20 to 40. Unlike three
compliance with positioning of "Just for Fans" years ago, there have more and more high

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cost-effective smartphones can be chosen didn’t an internet user and lived in rural,
nowadays, the group of people described internet social network software can’t cover
above had trended to saturation and may try enough population anymore, it need another
other phones too. Result the decrease of the media to propaganda products, the TV or
growth. OPPO and VIVO didn’t stress on radio broadcast, if necessary, put some huge
their phone’s performance data, but invited advertising in the main road of towns.
fashion celebrities endorse their products and
advertised on most popular TV show. OPPO’s Thirdly, increases produce capacity in order
spokesman includes Super Junior-M, to sufficient in inventory. Open direct sale
Leonardo, Yang Mi, Li Yi Feng, Lu Han, TF store or agent store in the main town of India,
Boys, and Yang Yang and so on.The one hand, the rural people can buy
spokesman of VIVO is the protagonist of smartphones conveniently and quickly, not
Descendants of the Sun, Joong-ki Song. They panic buying thought internet; on other hand,
have the same feature that is they were most it good for improving the after-sales service if
popular star at that time and young fashion, the smartphone broke.
in line with the temperament of phone.
Solve the Patent Issues

The TV shows of their advertised on are most To increasing the patent reserves, solve the
popular in China, with a high audience rating, patent dispute about SEP of smartphones.
such as the Hunan TVs’ Happy Camp, The easiest way is pay the license fee, all
Zhejiang Satellite TVs’ Sing! China.These company which has patents wants to make
marketing had extremely increased the brand more money from their patent but not use by
awareness of OPPO and VIVO.Except other freely. Such as the Ericsson mentioned
celebrity’s endorsement and advertised on TV, before, Ericsson requested Xiaomi pay for the
their direct sales store and advertising could patent in July, 2014, but xiaomi didn’t
be seem everywhere in rural areas of China, answered, as a result Xiaomi sued by
increased the brand awareness further and Ericsson. Although pay the license fee can get
buy conveniently. Unlike xiaomi, you may be the patent, the cost you can’t control by
not being able to buy Xiaomi’s phone when yourself, pay constant percentage of turnover
you want it. or profit which negotiate with the authorizer,
can’t get the economics of scale. In the
We know that there about 1 billion people negotiations, the licensee always is in the
isn’t internet user, and in the rural areas are passive side. In long run, especially in this
the fastest growing of internet user. Xiaomi “red sea” market, is bad for Xiaomi Company,
must pay more intention to this situation. In for its healthy development.
order to the brand awareness, put more
investment in advertising, form the The second way is develop the patents by
experience of OPPO and VIVO, it is worth to themselves. It’s no doubt that increase
do it. Firstly, invite popular stars in India as investment to develop patents is
spokesman, Xiaomi had invited Liu Shi Shi, time-consuming, laborious, and costly.
Liu Hao Ran and Wu XiuBo as the Difference with Ericsson and Huawei, they
spokesman of Red Mi, it illustrate that good at communications technology, Xiaomi
Xiaomi had changed its online marketing Company not good at this filed, the marketing
strategy which always be before. So xiaomi be and software is his specialty. Need huge
able to invite the local or international capital to recruit new talented persons; do
celebrities whom accepted by many Indian, research again and again, it’s a long time
the cost will be large, but for Xiaomi investment. There has another question, the
Company, it can be accepted nowadays. result of investments is uncertain, it may fail,
Secondly, in India, because most of Indian and it is great loss.

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The third way is corporate with other the quality of service. More detail, this also
smartphones vendors which have same goals requires the company to focus on improving
that sell phones to around the world but employees' service awareness and carry out a
restraint by the patents, combine advantage full range of training for repair shop staff to
of difference firms to develop the patents. improve their service quality. Furthermore,
Developing together, on one hand, can the building of the sale outlets is very crucial.
combine different advantage of difference Setting up more direct sales service points
firms, improve the quality of innovation; on and Xiaomi Home in big and medium sized
other hand, can reduce the investment and cities can help to ensure the timely
risk of each company. It seems win-win maintenance of Xiaomi phone; Corporate with
cooperation, corporate with other company is local retail outlets in small cities in order to
a hard things, they are competitors, always service rural customers.
hate each other ordinarily. Except related to
Recommended Solution
converge of difference company culture; how
to develop, how much pay for the investment To increase the brand awareness, there
and how to share the achievement and so on, alternative solutions above all are important.
it’s hard to negotiation. First of all, localize Xiaomi’s core competence
in India. That is creating an Indian
Improve the Quality of Smartphone and
customized version operating system if
After-Sales Service
possible; sells value-for-money products.
The quality of smartphones includes
hardware and software becauseXiaomi’s Then, continual reliance on mobile internet
smartphone assembles by other OEM and social media, in Indian market, Xiaomi
manufacturers, the quality of hardware can’t has to set up a robust social ecosystem and
not control by Xiaomi Company itself, as the make full use of local social media such as
development of the assembling, the issue of Facebook, Google Plus and Twitter, because
hardware creates less and less, unless the there no Weibo and WeChat is not popular.
man-made issue. Another problem of quality Except the online strategy, according to the
is the software, such as system update, actual situation of India and successful
software incompatibility and so on. As sell experience of other company, it is very
many phones, the problem can’t avoid.As a important to invite most popular stars as the
result, the after-sales service business is very spokesman of Xiaomi phone, and advertising
crucial for Xiaomi. on TV shows which had high audience rate. It
may increase the cost of product, as Xiaomi
So it is an important thing for Xiaomi to had done this in China and received
ensure that the user experience is as fantastic appreciate, I think xiaomi has the ability
all along even when Xiaomi phone user have execute this strategy in India, increase the
a problem with their handsets in India total shipment, the average fix cost will
markets. Therefore, it is urgent for Xiaomi to decrease.
set up sufficient online communities and
forums, direct phone hotlines and even As far as I am concern, in order to solve the
service centers throughout the market. patent issues. In short run, it can’t avoid
Furthermore, Xiaomi has to build local teams paying the license fee. What Xiaomi must to
consisted of Xiaomi advisor who is good at do is improve other core competence for
local language and even local people. In increase the shipments, thus strengthen the
addition, in order to provide excellent service, bargaining chips with the authorizer. In long
Xiaomi has to keep these service centers run, Xiaomi Company must emphasis on
competitive with each other and set up a independent innovation, although this move
range of key performance indicators to ensure will cost a lot of time and money in the initial

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period, Xiaomi has to do so. Because there is employee. Xiaomi must train for Indian
no well-known companies who do not have employee; explain characteristics and
their own core technology in the world. Core specifications of company’s culture, but do not
technology is the only way that one company force it to accept all. Also requires the
must take to develop into a well-known one: management of Xiaomi Company to actively
To be specific, firstly, the company must put organize employees from different cultural
emphasis on technological innovation and backgrounds to communicate effectively
increase investment in research. No within the company.
investments, no outputs. No innovations, no
improvements. Just as the old saying goes," For example, Xiaomi can often arrange tea
no pains, no gains". Secondly, the company party, dinners and other activities to deepen
must pay attention to personnel training: mutual understanding, and to clear
enlist the talents all over the world and understanding of each other cultural
establish effective personnel training differences. The company's incentives are also
mechanism, ensuring that every staff has can be different, develop different incentive
given full scope to his/her talents. And the programs to meet the different needs of
way corporate with other smartphones employees. Only in this way can guarantee
vendors is hard to carry out. The keep point is the effectiveness of incentives, can fully
improved independent research and mobilize the staff's enthusiasm and initiative.
development.
Conclusion

To improve the after-sales service, firstly, set This passage systematically discusses what
up enough online communities and forums, the problems of Xiaomi company operate in
direct phone hotlines, ensure consumer India, what cause those problem, presented
advisory and solve the common problem of alternative solutions and recommended
Xiaomi phone. Second, set up more direct solution at last.
sales service points and Xiaomi Home in big
and medium sized cities can help to ensure In a word, to increase the brand awareness,
the timely maintenance of Xiaomi phone; localize Xiaomi’s core competence in India
Corporate with local retail outlets in small and reliance on mobile internet and social
cities in order to service rural customers and media, in Indian market. In order to solve the
repair the phone. patent issues. In short run, it can’t avoid
paying the license fee.Long-run Xiaomi
Then, in order to provide excellent service, Company must emphasis on independent
Xiaomi has to keep improving employees' innovation, to improve the after-sales service,
service awareness and carry out a full range firstly, set up enough online communities and
of training for repair shop staff to improve forums, second, set up more direct sales
their service quality; service centers should service points and Xiaomi Home in big and
competitive with each other and set up a medium sized cities.
range of key performance indicators to ensure
the quality of service. Above solutions suitable for Xiaomi Company,
it also may suitable for other China company
Xiaomi Company will set up online which wants to expand the India market.
communities, direct sales service points, There no standard method to solve every
Xiaomi Home and other localized activity; it problem, administrators should take a way to
can’t avoid recruiting local people, which will suit you.
relate to cross-culture management of

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