Chinese electronics maker Xiaomi to expand beyond Asia with Brazil / AP

The device is priced at 499 Brazilian reals ($160) — about half the price of comparable models from Samsung and Motorola. “Brazil is the fourth-largest smartphone market in the world, and it will be our launchpad for Latin America,” former Google executive Hugo Barra, now Xiaomi’s head of international expansion, said at the launch in Sao Paulo.

In Asia, where Xiaomi sold more than 60 million smartphones last year, online communities and word-of-mouth marketing on social media have been important factors in the company’s growth. Xiaomi relies solely on word-of-mouth marketing and sells its products online, which allows it to cut costs significantly. Meanwhile, Brazil has high import duties, and to address this, Xiaomi is assembling its devices locally in partnership with Foxconn and is also trying to find local suppliers for components like batteries.

Sixth in the world

Xiaomi sold 14,740 smartphones to customers in the first quarter of 2015, according to Gartner data. This is 4.4% of all global sales, the company took sixth place in the world after Samsung, Apple, Lenovo, Huawei and LG

“The value creation scheme and business model we propose are ideally suited to the Brazilian context,” Barra explained. “We are primarily focused on e-commerce, and people in this country are already accustomed to buying goods online. Now, when the economy is in recession, we have a unique opportunity to enter this market.”

Initially, Xiaomi plans to sell its smartphones in several large and dynamic markets.

Many analysts say international expansion is key to achieving the company's goal of selling at least 100 million smartphones this year. "Growth is slowing in China," says Ben Bajarin, an analyst at Creative Strategies, referring to the company's lackluster quarterly results over the past six months. "The company plans to be very aggressive in Brazil and India. Success in these markets will determine its future growth."

Bajarin notes that in China, Xiaomi has to compete fiercely with Huawei and Samsung in the mid-price range, and also take into account the activation of Apple and the growing popularity of iPhone models. However, as Barra assures, Xiaomi's business is growing quite steadily in China. In the Brazilian market, Redmi 2 phones with a 4.7-inch screen will directly compete with products from Samsung and the local company Blu.

In parallel with the launch of the Brazilian project, Xiaomi announced the appointment of its new CFO. The post was filled by Shou Zi Chiu, a former partner at Yuri Milner’s investment fund DST, which has financed companies such as Airbnb, Facebook, Twitter, and Xiaomi itself. “Shou Zi has proven himself to be a successful investor and an excellent financial specialist,” said Lei Jun, Xiaomi’s CEO. “He was one of the first to understand the value of Xiaomi and helped DST invest in our company.”

FT, 1.07.2015, Alexander Silonov

Xiaomi to Start Expansion Outside Asia