Smart Phones with Smarter Budgets

Cairo - 22 August 2018: Chinese smartphone and smart hardware maker Xiaomi Global sees great potentials in the Egyptian market, which is yielding the highest sales in the MENA region. The Chinese company was only established in 2010, but is now ranked the world’s fourth-largest smartphone manufacturer.

With a strategy to produce affordable devices with a hardware net profit margin not exceeding 5, the firm believes that high-quality and well-designed technology products and services should be accessible to the world.

Xiaomi’s IPO was hailed as the biggest and most important Chinese technology debut in years, and trading on the Hong Kong Stock Exchange started on July 9.

Egypt is a promising market for Xiaomi, and the company is aiming to become number one in the country on the short run, with its eyes on potentials for manufacturing in Egypt to meet local market demand as well as export.

Head of Expansion Marketing at Xiaomi Global Steven Wang talks to Egypt Today on the sidelines of the company’s launch of two Mi A2 phones in Madrid, Spain on July 24.

Xiaomi entered the Egyptian market only a year ago, how do you assess Xiaomi’s performance during this year?

When we first entered Egypt, our key purpose was to establish a solid foundation because it is very important to have stability; so last year was all about building foundation. We listen very carefully to Mi fans and pay absolute attention to their feedback. We learn from them about what they want to see in the Egyptian market and what they think is lacking to build a strategy around that.

What were the challenges for Xiaomi in Egypt?

Egypt is a developing nation so people are switching from pager phones to mobile phones, as well as switching from their first mobile phone to a second mobile phone. So now, the user experience is actually a big problem, we believe that this experience should be accessible to everybody; good user experience right now is only accessible to people of middle or high income in Egypt.

So we learn a lot about the user experience from the fans; Xiaomi operates in many countries, so we must make a phone that fits all these countries. This was the first foundation in Xiaomi; learning about people and about the market. The second foundation was setting up our networks of distribution.

What about the rank of your company globally, and particularly in Egypt?

According to IDC [International Data Corporation; a leading market intelligence firm], Xiaomi was among the top five smartphone brands in terms of unit shipments in the fourth quarter of 2017 in the following 15 countries and regions: India, Myanmar, Ukraine, mainland China, Egypt, Greece, Israel, Qatar, Russia, Indonesia, Singapore, Poland, Bulgaria, Czech Republic and Kazakhstan. And in the first quarter of 2018, Xiaomi ranked number four globally in terms of smartphone unit shipments.

In terms of market share and competition, what do you aspire to achieve in the Egyptian market?

Our goal is to number one in Egypt, and therefore, we are working first on enhancing our reputation and building a solid foundation in the country. The market share is not important for us now, and it is not a key indicator of our performance at the time being. By 2020, we will be a major player in the Egyptian market as we have a strong two-year plan for this purpose, and this is what we will focus on right now.

When will Xiaomi launch its laptops in Egypt?

I do not have a specific timeframe for launching our laptops in Egypt, but I can assure you that we will bring in more high-quality products at competitive prices by 2020.

Are you expanding your distribution network anytime soon?

There are no current plans, but we work very well now on something to launch later, and will have a very good reach. We recently opened two more authorized Mi Stores, so in total there are six authorized Mi Stores in Egypt now; three in Cairo, one in Alexandria, one in Ismailia and one in Mansoura. We will definitely open more to broaden our reach and enhance users’ experience.

Do you look at Egypt as a country of potential to build a factory in, with ability to export to the Middle East and North Africa region?

I think there is a lot to consider when it comes to manufacturing, but it’s all about the volumes that shows you’re moving in the region, as we have been in Egypt for one year now. Our market share is going up, but the volume is more important, it still makes more sense for up to import rather than to manufacture, that is because we still very young in the region. Something else [to consider] is quality; when users buy a product, our business model is about surprising the user, we surprise them with how high-quality it is.

Do you think manufacturing in the Middle East will lower the quality?

It’s not [about] lowering the quality. It is just how Egypt’s quality control is very tricky actually; because manufacturing is a very traditional business. Honestly, I think that quality in the East needs to be controlled tighter. For example, it can’t be compared to quality control in Asia, but still; the region is of very high potential and definitely, in the future, it will not be the same, so maybe we would start running operations in Egypt.

Have you launched all your phones in Egypt?

Yes, by this year, every phone in Xiaomi’s portfolio has been launched in Egypt.

Which one was the biggest success?

I can say the REDMI 5 A is the best selling product by Xiaomi in Egypt so far. The second was Mi A1, but both mobile phones exceeded our expectations.

Are you selling more in Cairo or in other governorates?

Right now, mostly in major cities like Cairo, back to foundation. Our first launch was in the capital, then in major cities, but gradually we will get deeper and reach other spots.

Will Xiaomi expand with other products in Egypt?

Of course, Xiaomi has investments in over 90 companies that are focused on the development of smart hardware and lifestyle products; we invest in companies then they make a product and put XIAOMI’s logo on it, and we sell it through our sales’ channels. We can do this because we have such high brand awareness, manufactory, supply chain, etc.

What can we expect from Xiaomi after smartphones?

The second phase is to bring in more products like laptops, robots, vacuum cleaners, and so on. The third phase is more interesting; making products for the Egyptian market: But this is mostly a 10- year plan.