Xiang Wang, President of Xiaomi, said: “We want to sell at the lowest possible price, rather than at a premium price.”
By creating smartphones and other premium products, but selling them at more affordable prices to the public, Xiaomi has in fact managed to make itself known and appreciated very quickly. In a short time, demand has grown worldwide, and it now has more than 1,000 shops worldwide, including places like Mexico City, Dubai and London, and around 40 per cent of its total revenue comes from cross-border markets outside mainland China.
In Xiaomi’s international expansion strategy, however, we note that the key word is ‘localise’. Entering new markets, as well as identifying the best strategy for expanding the product line, is always preceded by a careful study of the customer’s desires, trying to propose something that will please them and make the shopping experience pleasant and fulfilling. In 2019, in an interview with CNBC about entering the US market, Wang said, “We are working very hard trying to design a product for the US market, but resources are the big problem. The US market is very, very different.”
Localisation is not just limited to products, but extends to everything about the shopping experience. First and foremost, the language. Xiaomi understood early on the need to include customer support in the language of each specific market. Language barriers inevitably create a cultural and emotional distance with the customer, whereas having someone who is easy to communicate with is the first step towards building loyalty and creating a positive customer experience.
Exclusive local distributors for efficient shipping
Finally, Xiaomi, in its international expansion strategy, has considered that the issue of product distribution is of primary importance. Fast and efficient shipping is undoubtedly essential to keep customers satisfied and to encourage them to buy from us again. However, when making cross-border sales, it is common to come across unforeseen events that can slow down the shipment, such as customs checks or, if several stops are necessary to reach the destination, a trivial delay by one of the carriers can compromise the final delivery. For this reason, in outlining its strategy for expanding its product line internationally, the company has planned to identify local distributors who sell online in each of the markets it targets, entering into an exclusive partnership with them.
This choice certainly simplifies the management of shipments, but also that of product returns in the event of malfunctioning or dissatisfaction on the part of the end customer.
Localised online presence to build success
The web has always played a key role in the Chinese brand’s international expansion strategy. CEO Lei Jun realised early on the importance of creating a fan base (now called “Mi Fans”) and that the web would be the right starting point to trigger positive word of mouth. In a short time Xiaomi was able to build and spread its reputation like wildfire, first in China, and soon across the rest of the world, creating a cohesive and highly loyal community. The product line expansion strategy is not just about creating a desire in customers, but also about wanting to drive them back to the company’s proprietary ecommerce platforms (such as Mi Market and other apps). For this reason, it is important that users are familiar with the language used, the interface proposed, and find in it the satisfaction of all their purchasing needs. For Xiaomi, this means guaranteeing ease and security in payments, optimal management of returns, and fast delivery times; conditions that must be guaranteed in all the markets in which it is present. The example of Xiaomi should be kept in mind by all companies wishing to do cross-border ecommerce. For those who do not have the economic and technological facilities of the Chinese giant, an excellent solution may be to rely on local partners, such as Go Global Ecommerce, who can support companies in cross-border sales by providing all the services they need.
Going local to go global: what Xiaomi teaches us
The Xiaomi case study analysis shows us the importance of ‘going local’, localising not only the product offering, but the entire shopping experience and supply chain. In particular, speaking the language of the customers creates greater proximity, as they feel they can talk to the company without too much difficulty should any problems arise or should they need help. In most cases, in order to create a good international expansion strategy that ensures effective market penetration and good positioning, it would be advisable to rely on companies that specialise in developing cross-border online sales, such as Go Global Ecommerce, a provider of dedicated cross-border ecommerce solutions for direct-to-consumer (D2C) companies that want to internationalise their business. This makes it easier, for example, to facilitate logistics operations by finding local distributors, but above all, it facilitates the organisation of returns and refunds. Finally, such a partnership is also valuable for managing global payments, taxes and fraud. A set of services that can be very helpful, if not indispensable, when targeting a foreign market.