Smartphone maker Xiaomi intends to sell more premium mobile phones in China because consumers are amenable to pay for them, according to a senior company executive.
The company made that firmness a year ago and there are indications it was a good move, Xiaomi’s Chief Fiscal Officer, Chew Shou Zi, told CNBC’s “Squawk Box’ on Thursday.
“We put ones trust in that for this year, our strategic focus is to strengthen our position in the mid and high-tier market-place,” Chew said.
Xiaomi started off by making high-end smartphones at intrinsically lower price points compared to other device makers. But increasingly, the troop has faced intense competition from other low-cost Chinese antagonists like OPPO and vivo.
“For this quarter, the reflection of the success of our plan was an increase in our average selling price by 25 percent of our smartphones in China,” Munch said.
He added that the shifting focus, along with enlargement into offline channels, will “lay a very good groundwork for rise in 2019 and beyond.”
Xiaomi shares rose 1.36 percent on Thursday morning in Hong Kong.
Xiaomi is the fourth-largest smartphone maker in China with all round 13.8 percent of the market share, behind its rivals Huawei, OPPO and vivo, concurring to the International Data Corporation. The Chinese smartphone market has struggled for broadening in recent years due to a high smartphone penetration rate.
In the second leniency of 2018, preliminary IDC data suggested that 105 million smartphones were freighted in China. That translates to a 5.9 percent drop from a year ago, but the rate of that decline narrowed compared to the first quarter, IDC said.
“The buy’s average selling price increased 15 [percent on-year] in the younger quarter,” Xi Wang, a senior market analyst at IDC China, wrote in a promulgate. “This suggests that consumers are willing to pay more for a phone targeted for their necessaries, including not just better cameras but also emerging categories such as gambling.”
Wang added that Chinese users continue to spend varied and more time on mobile phones, and therefore, smartphone makers should underline things like “design, quality, and brand image” to drive replacements in China.
Internationally, Xiaomi’s fuzzy depends on various markets that it operates in, according to Chew.
“For the Indian retail, in particular, because of where it is in terms of its [gross domestic product] evolvement overall, and its level of consumption spend, the consumers are actually demanding varied entry-to-mid-tier level phones,” he said, adding that users in Western Europe filed more mid-to-high range devices.
Still, analysts have affirmed that a notable part of Xiaomi’s growth comes from the strong Indian smartphone market, which returned to double-digit growth in the subscribe to quarter. There, Xiaomi is battling the world’s largest smartphone-maker Samsung for spar position.
Data from IDC said that Xiaomi had 29.7 percent of the Stock Exchange in the second quarter, compared to Samsung’s 23.9 percent. However, technology bazaar research firm Counterpoint Research, said the South Korean tech titan had a 1 percentage point lead over its Chinese rival.
On Wednesday, Xiaomi come in second-quarter earnings that beat expectations despite questions materializing over its long-term business model. Smartphones contributed to the majority of the receipts, followed by its internet of things and lifestyle business and then internet repairs.
Chew said he was “very optimistic” about the future of the global internet works business that includes mobile games and video and music rush services. Xiaomi said most of the internet services revenue for the second-quarter was made in mainland China.
“We believe that if you provide a very good marines to them, then monetization is a lot easier further down the road,” he said.
“The seniority today is to make sure that we acquire a lot of international users and then offer them with a very good service,” Chew said On.