Xiaomi’s Globalization Strategy and Challenges

Xiaomi’s Globalization Strategy and Challenges

By
Gang Zheng, Yanting Guo, Robert A. Burgelman
2016|Case No.SM262| Length 30 pgs.

Xiaomi, the Chinese smartphone company founded in 2010, had quickly become an industry leader in the Chinese market. By 2016 it had started to expand internationally, and this case lays out the company’s globalization strategies and challenges moving forward. Hugo Barra, a top Android executive, had left Google a few years earlier to lead Xiaomi’s international growth. Xiaomi’s founder and CEO, Lei Jun, said the company’s ultimate goal was “making good but cheap things,” a low pricing strategy that had succeeded in China. The company sold over 70 million mobile phones in 2015—while aggressively building out a robust ecosystem. However, Xiaomi had expected to sell 80 to 100 million units that year; it was facing a declining domestic market and increased competition. Therefore, international expansion had become an important part of the company’s overall strategy.

But expanding to other countries would be a challenging road. For one, it would take considerable time and effort to tailor the company’s Android-based MIUI operating system for diversified markets—and obtain market-access qualifications. Xiaomi’s patent portfolio was thin compared to those of large competitors, and it ran the risk of lawsuits from companies that held patent rights in the countries it wanted to enter. Other challenges included building out sales channels, output capacity, and cross-culture management development. Xiaomi’s international plan included ten countries in Asia, Europe, and Latin America. The next year or two would be critical for Xiaomi—and it needed to make the right strategic decisions to succeed in its globalization efforts. 

Learning Objective

The objective is for students to learn about the opportunities and challenges of global expansion—in this case focusing on the fast-moving high-tech space. Students should also be able to analyze the company’s business model and evaluate whether a model that succeeded domestically would also succeed internationally.

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