Xiaomi passes Samsung in China to lead biggest smartphone market

by **Cals** Wed 06 Aug 2014, 01:07

Business & Markets 2014

Written by Bloomberg

Tuesday, 05 August 2014 11:38

(Aug 5): Xiaomi Corp. tripled smartphone shipments in China last quarter, displacing Samsung Electronics Co. to become the No. 1 vendor in the world’s largest market just four years after its founding.

The Beijing-based company shipped 15 million devices in the second quarter, giving it a 14 percent share of the Chinese market, researcher Canalys said in a statement on its website. Samsung shipped 13.2 million smartphones, giving the South Korean maker about 12 percent of the market.

Chinese consumers are turning to domestic producers to meet demand with Apple Inc., which boosted shipments 58 percent after being offered by China Mobile Ltd., being the only other foreign vendor in the top 10. Xiaomi has won customers by selling cheaper devices packed with features directly to consumers through its website as the company targets countries including India, Brazil and Russia for growth.

“Xiaomi does have the potential to be a disruptive force beyond China and international vendors should take note,” Jessica Kwee, Singapore-based analyst for Canalys, said in the statement.

China accounted for 108.5 million smartphone shipments in the second quarter, or about 37 percent of the global total, according to Canalys. Lenovo Group Ltd. was the third-largest vendor in China during the quarter with 13 million shipments.

Xiaomi started selling its devices in India last month. In a July 29 flash sale, it sold 20,000 of its Mi3 smartphones in 5 seconds, the company said.

Xiaomi Valuation

Xiaomi, which had a valuation of $10 billion after a fundraising round a year ago, almost quadrupled phone unit sales in the first half of this year. The company sold 26 million smartphones in the first half of this year, almost four times the 7.03 million devices sold in the same period a year ago.

Founder Lei Jun has set a target to boost phone shipments to 100 million units next year. The company’s media office didn’t immediately respond to an e-mail seeking comment.

Samsung last week posted its smallest quarterly profit in two years as it boosted spending on marketing for its cheaper devices to fend off competition. Its China shipments dropped 15 percent from a year earlier, according to Canalys. Clara Lee, a Seoul-based spokeswoman for Samsung, couldn’t immediately comment.

“We will more aggressively respond to the low- to mid-end smartphone market in China, which is growing rapidly now,” Kim Hyun Joon, senior vice president of Samsung’s mobile strategic planning team, told investors July 31. “There is a concern that it may put further margin pressure on the profitability in the short term, but we will expand our shipment to secure profit.”