Xiaomi Technology Co's stand at a trade show in Shenzhen, Guangdong province. The company, founded in 2010, has sold 7 million smartphones this year. Yu Ge / For China Daily

Smartphone maker postpones overseas move to focus on demand in home market

Xiaomi Technology Co, the mobile phone maker that aims to challenge Apple Inc, expects to double its smartphone sales next year after quickly rising to prominence as arguably the most eye-catching latecomer to the industry.

According to Lei Jun, its founder and chairman, the Internet-based company has sold 7 million smartphones this year, bringing in sales of 12 billion yuan ($1.9 billion), and he expects that number to double in 2013.

The company, founded in 2010, started selling mobile phones last year and has built a loyal customer base through the marketing tactic of creating a sense of exclusivity around its products, much like Apple does.

"The results are far beyond my expectations," said Lei in an interview.

"I have been so lucky this year - it has been the best of my life."

However, he said the company will postpone its overseas expansion, which had been expected to begin this year, because in the domestic market alone, its stocks are failing to keep up with demand.

Its latest smartphone, the Xiaomi phone 2, which debuted in October, has specifications similar to those of Apple's iPhone 5 but sells for just $320, about half the price of its rival.

The first batch of 50,000 phones sold out in less than two minutes when they were released on October 30. Later, larger batches also sold out within minutes.

Some analysts attribute Xiaomi's popularity to its "hunger marketing" strategy - selling in small batches and creating pent-up demand to give it a free-marketing buzz, while Lei insists it is due to a shortage of components.

Lei, who views the late Apple founder Steve Jobs as his idol, said he doesn't want the company to grow too fast amid its rising popularity.

"We aren't in any hurry. Those who die are the ones who want too much," he said.

The 43-year-old Internet veteran co-founded online retailer Joyo.com in 1994, and 10 years later sold it to Amazon.com Inc for $75 million. He listed Kingsoft, an antivirus software company, in 2007 and YY Inc, a social media platform, this year.

However, some analysts suggest that his expectation of doubling sales next year is a bit too aggressive.

"Every company hits a bottleneck after growing rapidly, and this is likely for Xiaomi, too," said Sandy Shen, an analyst at technology researcher Gartner Inc.

Most of Xiaomi's users are young people, who are sensitive to price, and the company needs to expand its appeal to other types of customers if it really wants to continue its fast growth, she added.

Xiang Ligang, a Beijing-based analyst and founder of industry website Cctime.com, also thought Lei would be under considerable pressure to achieve his goals next year.

"Xiaomi is very good at marketing, but when the current craze passes, it needs to come up with more ways to continue," he said.

The company may need to turn to traditional ways of selling phones, such as relying more on cooperation with mobile carriers, which will boost sales through large numbers of outlets, and offer better after-sales service, he added.

Xiaomi still sells most of its phones online, and has teamed up with two mobile carriers to sell them.

In June, Xiaomi raised $216 million in new funding largely from Singapore's sovereign wealth fund, the Government of Singapore Investment Corp, giving it a market valuation of $4 billion. In comparison, Nokia Corp has a current market capitalization of $15 billion.

chenlimin@chinadaily.com.cn

(China Daily 12/28/2012 page15)