Xiaomi exited Brazil in surprise strategy revamp

Xiaomi will not launch new smartphones there, at least in the short-term. The sales struggle that Xiaomi has faced in Brazil has led to a complete revision its the company’s strategy in South America’s largest country. In an exclusive interview with AndroidPIT Brazil, Xiaomi global vice president Hugo Barra explained the new way forward. Contrary to what you might think, all is not so rosy for Xiaomi. One of the world’s largest smartphone manufacturer has hit tough times in Brazil, the only non-Asian country where it is officially based.

Fanfare arrival in Brazil in 2015

The announcement was a stir at the time. Xiaomi, which was the fifth-largest phone manufacturer last year, officially landed in Brazil in July, 2015. “Brazil is our gateway to Latin America, but we have no expansion plans for other countries,” Mr Barra told AFP.

It was clear the objective back then was to launch in a booming smartphone market where sales would rise more than 50 percent each year. But today, it’s clear that this paradise has not been found.

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Hugo Barra: “We have decided not to have new product launches (in Brazil) in the short term.” / © ANDROIDPIT

Since the announcement in 2015, two smartphones have thus been distributed officially in Brazil: the Redmi 2 and Redmi 2 Pro. There was success but the competition, including from Motorola, was tough. But only a year after its arrival, Xiaomi decided to revise its plans Brazil. The company has now decided not to launch new smartphones there and instead relocate its teams back to China.

Only a year after its arrival, Xiaomi has decided to revise its plans Brazil

“Because of the constant evolution of the rules of production and taxation for online sales in Brazil, we decided not to host new product launches in the country in the short term. We know the expectations of the fans about new products, but we decided that, given the current situation, it was the best decision,” Mr Barra said.

Why a change in strategy?

The reasons for this decision are many. Besides a subsidy system and legal decisions now less favorable to the company, Xiaomi has also faced the problem of selling its phones exclusively online. However, not all consumers are ready to buy phones online just yet.

The result is now that Xiaomi is selling its smartphones through local Brazilian partners. There are e-commerce sites selling them, but there are also quite a number of physical stores. “The products will be available at Vivo and Submarino stories, our e-commerce partners, Americanas.com, Shoptime, Casas Bahia, extra, Pontofrio, Walmart.com, and Ricardo Eletro Webfones,” Mr Barra said.

Redmi Pro 2: one of the two devices sold in Brazil. / © ANDROIDPIT

Another explanation for this setback is that the firm has also underestimated competition in the Brazilian market. Motorola, for example, reigns supreme in Brazil, where the Moto G is one of the most-sold smartphones. Samsung, the world number one, is also dominant.

What is the new strategy for Xiaomi?

Xiaomi is not officially leaving Brazil, but it is a historic setback for a brand known for its meteoric rise. “This restructuring is made to respond in the best way possible to our international operations and ensure expansion into new markets,” added Mr Barra.

It’s a historic setback for a brand known for its meteoric rise

Besides a change in its sales model, Mr Barra confirmed that the company’s staffing structure would undergo changes. Indeed, the departments of marketing and social networks would be transferred to the Beijing headquarters, where they would continue to work for Brazil and North America: “Soon these people will go to Beijing, where they will join our global marketing team. They will continue to take care of our marketing activities in Brazil and will also contribute to our plans for North America. With a team there, Brazil is gaining more relevance.”

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The Mi 5 will never see the light of day in Brazil. © ANDROIDPIT

Finally, it is the production of smartphones at a local level that has been completely revised. “We will make decisions regarding the importation or manufacture of local products available in Brazil according to each product. These will be produced in Brazil only if it is more advantageous then to import,” Mr Barra said.

Xiaomi isn’t leaving Brazil: it’s preparing for other markets

Founded in 2011, the firm has so far found great success. This is the first time Xiaomi has somehow lost. However, the company was keen to let us know that it had not formally exited Brazil and also did not regret its choice.

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The marriage between Brazil and Xiaomi is not as happy as one might think. / © Xiaomi

When asked if the Chinese company regretted having invested in Brazil, Mr Barra said: “Not at all. The Brazilian operation is successful and achieved the objectives set to date,” before adding, “for our part, these changes are very positive. We ensure that the business grows in an organized way and we’ll now focus on larger transactions we are preparing to do in different markets.”

Check out what other people think about itPVPierre Vitré

Do you think this is a defeat for Xiaomi?

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This last sentence will be remembered most. For if the honeymoon between Brazil and Xiaomi will not last very long, the company does not mean forgetting its expansion plans abroad. The United States will likely be among the first, but Europe should not necessarily be forgotten by Xiaomi.

Do you hope to see Xiaomi officially in the United States? Tell us in the comments.

[Source : https://www.androidpit.com/xiaomi-exits-brazil-in-surprise-strategy-revamp]