1.

​ H
​ ow can Xiaomi overcome the negative image of “made in China”?

Xiaomi can overcome this negative image by marketing itself as a unique Chinese brand with

high quality affordable tech products for the average consumer. We have three suggestions on

how to do so: ​(i) ​Xiaomi needs to understand how customers view the brand, and must market its

capabilities through the right channel. Some examples would be to feature ads with warranty and

quality assurances, additional efforts could include sponsoring live speed-tests, as Oppo has done

for its OnePlus phones. ​(ii) ​Xiaomi should avoid stretching its resources by launching too many

product lines. Based on exhibit 4 of the case, in 2014 and 2015 alone, Xiaomi launched several

product lines: Smart Home Products, BP monitors, Air purifiers etc. This type of unstructured

expansion of product lines can lead to manufacturing of low-quality products. Thus, they should

focus on flagship models and standardization. ​(iii) ​By leveraging cost innovation capabilities

across product lines, especially in emerging markets, Xiaomi can provide “more value for less

money” and grow its reputation through these markets as a cost-efficient solution for technology.

2.​ S
​ hould Xiaomi limit its global aspirations to the Asia-Pacific region? Why or why not?

Xiaomi should expand to more markets globally, and not limit itself to the Asia-Pacific region.

For three reasons: ​(i)​ The Chinese smartphone market is saturating.Year-on-year growth rate of

smartphone shipments in China has been decreasing since 2011.1 With fewer smartphones sold

in China, Xiaomi will want to expand to emerging markets in Africa, South America, the Middle

East, and Asia. ​(ii)​ Xiaomi’s core competency of being able to create an ecosystem of affordable

products, shows massive potential in growing markets where price has historically been a barrier

to such amenities. It can be argued that a majority of their target consumers lie within the Asian

1
TechCrunch. "Year-on-year Growth Rate of The Smartphone Shipment in China from 2009 to 2017 ." Statista - The Statistics Portal, Statista,
www.statista.com/statistics/866434/smartphone-shipment-annual-growth-rate-china/, Accessed 23 Sep 2018
market. However, the case mentions that even in Brazil, economic slowdown was causing

consumers to become more value conscious. In such markets, Xiaomi would stand out for its

core competency. ​(iii) ​By partnering with Microsoft and purchasing over 1500 smartphone

patents, Xiaomi can enter the US smartphone market and essentially compete as a market

specialist with affordable high quality phones. There are hindrances to competing in such

markets due to customer perceptions of Chinese phones as being “cheap copies” and the plethora

of contract-phone customers at the lower end (Since Xiaomi sells only unlocked phones).

Despite these hindrances, Xiaomi can find success in the US market. Cost-innovation strategy

can prove to be revolutionary, and just as Xiaomi created a price revolution in China, it could do

so in the US, by changing consumer perception of price-quality relation for smartphones.

3.​ W
​ hat would you recommend Xiaomi do to challenge Apple in the U.S. market?

(i) ​Xiaomi can challenge Apple if it can tailor its diversifies product lines to customer

preferences, selling devices with different features to suit customer needs within a budget. Apple,

on the other hand, releases only 2 or 3 models a year, with similar features and small hardware

differences.​ (ii)​ Since the US is a new market, they would have to invest more in brand

awareness. For example, they could sponsor YouTube reviews of their phones and speed tests

that compare it with the latest iPhone. A victory in such comparisons can go viral and would

increase Xiaomi’s brand awareness. ​(iii)​ Xiaomi’s “idea of ecosystem is more ambitious than

that of Apple”. Thus, Xiaomi should utilize its competitive advantage against Apple by entering

into the US market and dominating the lower end segments through its diverse product lines.

Once Xiaomi solidifies its dominance in the lower end markets, based on the principles of cost

innovation, the company can push upwards to challenge Apple for premium market segments.