By Lee Min-hyung
While a new order has prevailed in the global smartphone market focusing on less-pricey phones amid the rise of Chinese makers, Xiaomi ― well known as the “Chinese Apple” ― will have little impact in Korea, analysts said Friday.
They say it is very unlikely the Chinese smartphone maker will sell its smartphones via retail channels operated by the nation’s leading carriers ― SK Telecom, KT and LG Uplus ― as Xiaomi has a strategy to sell its products online.
But Xiaomi’s rapid rise in the budget mobile market and its growing strategy shift toward becoming a premium smartphone maker may change its plan to advance into Korea, according to the analysts.
“Foreign handset makers find it hard to overcome the high entry barriers of the domestic mobile market dominated by Samsung and LG,” said Lee Seung-woo, an analyst at IBK Investment & Securities. “Xiaomi has yet to officially tap into Korea, as the company is facing challenges over patents.”
Mentioning earlier decisions by well-known foreign handset makers including BlackBerry, HTC and Nokia, all of which exited the local market, Lee said “Xiaomi appears to be no exception.”
That is a reflection of the fact that Korean customers prefer high-end smartphones over cheaper ones such as Google’s Nexus.
But it is expected that Xiaomi may exert some influence on young customers, as it is price sensitive.
He said the company will not be able to change the paradigm in the domestic handset market, but cannot rule out the possibility that it will affect young customers to some extent. A growing number of Korean consumers purchase Xiaomi phones from online channels overseas, impressed by its competitive prices and appealing hardware specifications.
Until now, the Beijing-based electronics maker has not rolled out specific plans for the Korean market.
Jonathan Hwang, an analyst at KDB Daewoo Securities, said the company does not consider Korea a high-potential target market.
“The domestic market takes up only a small portion of revenue even to Korean companies, including Samsung and LG,” he said.
He said Xiaomi’s presence is weighing on Samsung and LG in the global market. “If the company keeps increasing its market share in the United States and European countries, it will present a huge threat to local electronics makers,” Hwang said.
Xiaomi was fifth in global mobile phone shipments during the second quarter, according to a report by U.S.-based market researcher Strategy Analytics. The report said the Chinese phone maker shipped 19.8 million mobile phones worldwide, capturing 4.6 percent of second-quarter market share. Samsung was first with 20.5 percent, followed by Apple with 10.9 percent.
Concerns are increasing over Xiaomi’s growth on the global stage. The researcher said Xiaomi is still a “major player” in the Chinese mobile market, but its growth rate is slowing and the company will face another local rival, Huawei, which ranked third in global mobile market share with 7 percent.