Dusseldorf China's Internet billionaire Lei Jun has Germany in mind for the first time. With Xiaomi he has created one of the most important digital companies in the People's Republic. And while sales in his home country are becoming more difficult with smartphones, he is focusing on Europe.
As part of the expansion Xiaomi wants to open an office in Germany for the first time, as the Handelsblatt learned. The choice fell on Dusseldorf. There is already the Chinese rival Huawei represented with its European headquarters. “We are working on setting up an office in the city,” said an Xiaomi spokesman on request.
The start for Xiaomi in Germany will be paired with a marketing offensive. over Amazon For the first time, the Chinese manufacturer has been selling its flagship Mi 9T Pro smartphone to end customers for a few days. As in China, Xiaomi relies on the strategy of lightning sales.
The manufacturer offered the first 3000 devices for 399.90 euros per smartphone. Meanwhile, Xiaomi sells the smartphone for 449.90 euros. The action catapulted the device into first place on the bestseller smartphone list on Amazon.
In addition, Xiaomi cooperates with the mobile communications group freenet and sells numerous products through electronics retailers Media Markt and Saturn. For a few days Xiaomi has also launched its own website for the German market, about which he refers to his sales partner Amazon.
Soon more partnerships would be announced, the company announced. “In addition, we are trying to bring the entire package of our business model, which consists of our own e-commerce platform mi.com and of course our offline Mi stores, to Germany,” said a spokesman for Xiaomi.
Company founder Lei Jun has succeeded in building up a new digital company in the highly competitive smartphone market within a few years. Just three years after launching in 2010, Xiaomi was listed as the world's most valuable start-up with a $ 45 billion valuation.
Here, Lei Jun relied on a special business model: He offered hardware at very reasonable prices. He wanted to generate revenue through the sale of services and paid additional offers.
Particularly favorable mass production
To do so, he consistently emphasizes the strength of China as a location. Especially the southern Chinese region around Shenzhen has developed into the world's most important place for the production of electronic devices. From televisions to laptops and smartphones, almost everything in the south of the People's Republic is produced for the world market. Finally, also lets US group Apple manufacture a large part of its products in China.
Lei Jun uses this strength to optimize the production of equipment on site. He put on a particularly favorable mass production. Starting with smartphones, Lei Jun also included laptops, floor scooters, air filters and even electric toothbrushes and drones. The devices were sold exclusively online. Instead of major advertising campaigns, Lei Jun relied on word-of-mouth propaganda and lightning sales.
The business turned out to be difficult in the meantime. Therefore, Lei Jun has prescribed a change of course for his company. Meanwhile, Xiaomi is trying harder to bet on higher quality products. The devices are no longer offered exclusively online, but also sold in their own Xiaomi stores.
At the same time, Xiaomi is accelerating global expansion. Initially, the company focused primarily on emerging markets and especially India. In November 2017 Xiaomi started with Spain as the first country in Europe. Xiaomi Vice President Liu De announced in Handelsblatt: “We have ambitious goals. We want to grow abroad by 150 percent each year. “
With these full-bodied promises Xiaomi also tried to convince international investors. But since the share's debut in July 2018, the company has had major problems communicating its vision successfully to its investors.
The group has lost around half of its value since the stock market launch in Hong Kong. Most recently, Xiaomi was valued at a market capitalization of approximately 18 billion euros. For the second quarter of 2019 Xiaomi was indeed a sales growth of 15 percent compared to the same period last year to about 52 billion yuan (about 6.6 billion euros) announce.
However, this was the lowest quarterly increase since the 2017 stock market debut and significantly less than analysts had expected. Especially in the home market China Xiaomi has to fight. “Xiaomi was able to make up for the slump in sales in China only thanks to strong sales abroad,” said Eric Wen, founder and chief executive of China's technology consulting firm Blue Lotus Research.
In return, international business is developing more and more. Xiaomi was particularly strong in networked household appliances and smart everyday items such as fitness tapes, Wen pointed out to the news agency Bloomberg.
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