Xiaomi’s founder Lei Jun. AP
As Huawei, China, was designated as the subject of export restrictions in the United States last year, a game change was predicted in the global smartphone industry. This is because Huawei, which has remained at the top with a 10% market share in the global market, seemed to be in a fixed order. The market’s interest was directed to the beneficiary companies to replace Huawei, and not a few spotlights were focused on Samsung Electronics. However, it turned out that Huawei’s vacancy was taken by Apple and Xiaomi.
According to IDC, a US market research firm, on the 19th, as of the fourth quarter of last year, Apple went to the top of the global smartphone market share. Apple’s sales volume in the fourth quarter of last year increased by 19% year-on-year to 87.46 million units, gaining the effect of launching the new iPhone 12, securing 23.3% market share. Samsung Electronics (17%), Xiaomi (11.5%), and Huawei (8.6%) followed.
Among them, Xiaomi is definitely one that stands out. Xiaomi’s sales in the fourth quarter of last year recorded 43.33 million units, a 31% increase from the same period last year. Compared to Samsung Electronics, which has stepped back during the same period, this is not a small achievement. In the fourth quarter of last year, shipments of Samsung Electronics smartphones stood at 63.78 million units, down 8% from the same period last year.
As expected, Huawei’s earnings plummeted. Huawei’s smartphone shipments in the fourth quarter of last year were only 3,234 million units, a sharp drop of 42% from the same period last year. Huawei, which surpassed Samsung Electronics in the second quarter of last year, ranked first. Since August of last year, the supply and demand of key components such as semiconductors has been blocked, and it has been hit directly.
Samsung Electronics’ hardship is also deepening. It is true that Huawei, which initially competed for the world’s No. 1 competition, fell into a victim of the US-China trade dispute, and Samsung Electronics’ reflex profit was expected. But when I opened the lid, the result was different. Samsung Electronics also lags behind Xiaomi in Russia, which has traditionally been strong. According to market research firm Counterpoint, in the fourth quarter of last year, Xiaomi ranked first in the Russian smartphone market with 31% market share. Xiaomi increased its market share by 11.8 percentage points in a year. On the other hand, Samsung Electronics rose 2.1 percentage points year over year to 27%, falling behind Xiaomi. Huawei’s market share, which marked the top spot in the same period last year, has been cut in half from 31.2% to 14.8% in one year.
Experts believe that Xiaomi’s’cost-performance (price-performance)’ and’online only’ strategies have been effective in the market. The place where Xiaomi’s strategy is most clearly revealed is the Indian market. Xiaomi turned to India in 2016 when faced with a crisis after being pushed by Huawei from China. At that time, Xiaomi’s market share in India was 3%, while Samsung Electronics held the dominant No. 1 position with 26%.
Xiaomi has reduced marketing costs by focusing on online sales rather than offline. In addition, as the surprise discount policy was continued, word of mouth from consumers was also received. As the new coronavirus infection (Corona 19) spread last year, the increase in online non-face-to-face transactions also positively affected the Xiaomi strategy. Xiaomi, which took control of the online distribution network first, expanded to the offline distribution network in stages.
“Samsung Electronics was sluggish due to intensifying competition with Chinese companies and shrinking demand for mid-to-low-priced models due to Corona 19,” said Roh Gyeong-tak, a researcher at Eugene Investment & Securities. “It’s filling up the vacancy quickly.”
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