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IT & Systems Management

China's Xiaomi targets ten markets in international expansion

Chinese smartphone maker Xiaomi plans to enter ten foreign markets later this year, including Brazil, Mexico and Russia, in a bid to expand globally with its low-cost but cutting-edge phones.

Having risen to become a top smartphone maker in its home market, Xiaomi has already begun selling phones in Singapore, and plans to also enter five other Southeast Asian markets including Malaysia, Indonesia, and Thailand later this year, it said Wednesday.

In addition, Xiaomi is targeting the Indian and Turkish markets.

Last year, the smartphone company hired former Google executive Hugo Barra to help lead its international expansion. It also recently changed its company website address to mi.com to reflect its new international profile. The new name cost Xiaomi US$3.6 million to acquire, company president Lin Bin said in a posting on Chinese social networking site Sina Weibo.

Driving much of Xiaomi's success have been the low prices of its phones, according to analysts. The company markets its phones with cutting-edge specs, but to set them apart from other high-end phones, it prices its handsets at only slightly above what it costs to make them.

For example, Xiaomi has begun selling a new 5.5-inch phone, called the Hongmi Note, for 799 yuan (US$129) without carrier subsidies. It has an eight-core 1.4GHz processor from MediaTek, a 13-megapixel rear-facing camera, and a 3200 mAh battery.

To further reduce costs, Xiaomi has shunned traditional ways of selling phones using physical stores and commercial ads. Instead, the company mainly sells its phones online, and has cultivated a growing fan base to help promote its products. It hopes to eventually sell software and virtual goods on its devices as a way to raise more revenue.

The business model has shaken up the Chinese smartphone market, putting pressure on other vendors such as ZTE and Huawei to also offer more affordable high-end phones, said Ryan Lai, an analyst with research firm IDC.

"It's definitely disrupting everyone," he said. "Now consumers expect phones with high-end specs at low prices."

Xiaomi plans to adopt the same business model to target foreign markets, Barra said earlier this month at the China 2.0 Forum in Beijing. To help build its fan base, Xiaomi updates the Android software features on its phones each week, using inputs from customers.

Barra added that he believes Xiaomi's model could end up disrupting the traditional ways smartphones are sold across the world.

"We are taking a very different approach in designing, manufacturing and selling, which I think can have an impact," he said. "But we are just getting started."

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