Can Three help Xiaomi crack the UK smartphone market?

Techno



Samsung and Apple’s duopoly as the world’s biggest smartphone manufacturers has left others competing in a fierce battle for third, a position usually occupied by whoever is making the biggest splash in the market at any one time.

While it might be a long time before the ‘big two’ become a foursome, it’s looking as though Chinese pair Huawei and Xiaomi are pulling clear of the rest, building on strong demand at home with international expansion.

Huawei has made steady progress in Western Europe thanks to a string of critically-acclaimed devices and the Honor range, most notably with the high-end Huawei P20. And now Xiaomi is ready to make its mark thanks to a partnership with CK Hutchison.

CK Hutchison is the parent company of Three and several retailers, including the UK’s Superdrug, and the deal will see Xiaomi products sold in Austria, Denmark, Hong Kong, Ireland, Italy, Sweden and the UK.

“With CK Hutchison’s global retail and telecom footprint, Xiaomi will have access to hundreds of millions of customers instantly,” declared Canning Fok, CK Hutchison Group Co-Managing Director.  “Xiaomi has high quality, well-designed products at accessible prices.  We expect them to be well received by both our telecom customers and our general retail customers.  This is a win-win situation for both companies.”

It’s a major milestone for Xiaomi, which has seen sales of its smartphones rise by an astonishing 129 per cent to 29.3 million units in the most recent quarter – a market share of eight per cent.

Beyond China, Xiaomi has been successful in targeting other Asian nations, but to continue this rate of growth it needs to look even further, especially with the company’s flotation taking place in the background.

Perfect partners?

Several Chinese manufacturers have risen from obscurity in recent years, seizing huge market share in their homeland thanks to aggressive pricing and low customer loyalty. But Oppo and Vivo have had limited impact beyond their domestic markets and Lenovo’s share now trials its compatriots and ZTE has even been banned from purchasing components and services from US firms.

“Securing a high-profile European distribution partner such as Hutchison is a very significant step for Xiaomi as it sets its eyes on further international expansion,” said Marina Koytcheva, an anlyst with CCS Insight. “Hutchison, which is known for being a market disruptor, is a great fit with Xiaomi as both brands appeal to young, tech-savvy and price-sensitive consumers.

“Xiaomi’s successful expansion in India has given it a huge confidence boost, however it might find Western Europe is a tougher market to crack. Apple and Samsung have very strong positions, and even Huawei, the third largest smartphone maker in the world, has found it very difficult to establish itself in this highly competitive market. We believe Xiaomi will face similar challenges, but there is no room for complacency by rivals when it comes to the threat that the combination Hutchison-Xiaomi could present.”

But there’s no doubting that Three’s retail network and marketing machine will be a huge asset in cracking the western market. Xiaomi’s product range extends beyond smartphones, into set top boxes, routers and other connected devices, something Three has alluded to.

“We have been watching Xiaomi’s success from afar and impressed with the huge range of connected devices that they currently offer,” said Tom Malleschitz, chief digital officer at Three UK.  “This partnership provides us with another leading brand in our smartphone range and also opens the door for innovative new connected products that we can provide to Three customers in the future.”

In 2013, Google’s Hugo Barra left the company in a surprise move to Xiaomi – a name few people could pronounce let alone recognise. It remains to be seen whether Xiaomi’s brand will resonate with consumers in the UK and Europe and whether more partnerships will be inked in the future, but Xiaomi won’t be so inconspicuous again.



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