High competition between Huawei and Xiaomi

Huawei and Xiaomi both take leading roles in China‘s smartphone market. Nowadays, we have witnessed fierce competition between these two companies, both competing for greater market share. As of Q2 2015, Huawei is recognised for the first time as Chinas top smartphone vendor, whilst Xiaomi has fallen to second place.

Source: Xiaomi website
Source: Huawei website

How Does Huawei defeat Xiaomi?

The success of Chinese smartphone maker Xiaomi is starting to fade as increasing competition from other Chinese smartphone makers move in, most notably Huawei. Whilst Xiaomi has suffered from a reduction in year-on-year shipments, Huawei has exceeded all expectations, particularly impressive given the cutthroat nature of the Chinese smart phone market. With a worldwide target of 80 million smartphone shipments for 2015, Xiaomi is under tremendous pressure to keep growing as an international player, as it is slowing down in its key home market. Huawei has published a new product called ‘Honer’ in the middle of this year. This new smartphone pitch is the strategy that Huawei carried out to counter Xiaomi’s products. Huawei uses Xiaomi’s own traditional style of products to fight against the company. To effectively target the Xiaomi’s wide customer base, Huawei match their main products to their opponent via orientation, release time and discount price. Miami’s main strategic advantage came from hunger marketing; the greater the perceived difficulty in acquiring an item, the more highly demanded it becomes. Consequently, Xiaomi used to base much of its reputation on the quality and low price. However, a flaw of this strategy is that those consumers unwilling to purchase their desired product from Xiaomi have a greater surplus of purchasing power, which Huawei have now targeted and utilized. In addition, Huawei’s product technology currently exceeds Xiaomi, which means Huawei can offer better smartphones at the same price with Xiaomi. Through this kind of customer dispersion, Xiaomi struggles to keep up a high growth speed. Meanwhile, when an online enterprise starts to compare its longevity with a traditional company, it is usual that the advantages of online enterprise are no longer as dominant as before. Thereby, however successful a marketing hype Xiaomi once had, it cannot avoid the competition dispersing its customer base through producing similar smartphones. Through this competition, we can identify that Huawei has a high awareness of its market position; from selecting strategy to following Xiaomi’s marketing. Its emphasis on production meets the abundance of customer’s needs without wasting money marketing different products to different markets. Consequently, in the battle for China smartphone supremacy, Huawei, the telecom equipment giant, is pulling ahead whilst newcomer Xiaomi has hit some difficulties.

What does Huawei think about itself?

The Huawei chief has said that: ‘our real competitor is Samsung and apple, not Xiaomi.’ In 2014, Huawei sold 75 million smartphones, being one of the three Chinese companies included in top 5 smartphone makers. Since Samsung and Apple are the two undisputed market leaders, Huawei is directly competing with Lenovo, Xiaomi and others for the no. 3 position. However, from the point of view of Huawei chief Richard Yu, the company’s real competitor is Samsung, not Xiaomi. Xiaomi’s Mi Note doesn’t offer advantages over the Huawei Ascend Mate7, and neither does the Xiaomi Mi4 over the Huawei Honor 6 Plus. It seems that Huawei views Xiaomi’s handsets to be competing with its mid-range smartphones, not with its premium flagships like the Mate7, Ascend P7, or Honor 6 Plus. Huawei’s ascent ate into some of Xiaomi’s sales and may have put pressure on Apple. This led to a steady market share rankings in the first quarter, but the most recent quarterly iPhone sales yesterday were disappointing; as the greater China market fell from being its top market for iPhones. Still, Apple has been successful in China, and on the streets of Beijing the iPhone is ubiquitous. But Apple is facing more competition, and Huawei is one of the formidable Chinese challengers.