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How Xiaomi became a top-selling brand in Indonesia
Xiaomi’s country director says the company is winning over Indonesian millennials and Gen Zers with affordable devices.
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i>Smartphones are a basic necessity in an increasingly digital world. According to DataReportal, 98 percent of Indonesian adults owned a smartphone in January 2021, a figure that is expected to grow as regional internet access improves.
Chinese electronics maker Xiaomi became the top-selling smartphone brand in Indonesia with a market share of 28 percent in the second quarter of the year, according to technology market analyst firm Canalys. The same study found that Xiaomi ranked second in global smartphone sales with 52.9 million devices to achieve an 87.4 percent year-on-year (yoy) increase in profit to 6.3 billion yuan (US$975.6 million).
The Jakarta Post’s Eisya A. Eloksari spoke with Xiaomi Indonesia country director Alvin Tse on Aug. 27 about the company’s marketing strategy and the challenges ahead for the smartphone industry.
Question: How has the pandemic affected Xiaomi sales, both globally and in Indonesia?
The overall macro trend is that there was a global decline in smartphone shipments, as many retail stores were in lockdown. People also do not have much disposable income to buy smartphones.
Answer: Thankfully, Xiaomi provides [its] products at affordable prices. So when people see smartphones as essential, they will choose a high-value smartphone as opposed to buying a phone as a status symbol.
In terms of total revenue in Indonesia, Xiaomi surpassed 87.8 billion yuan in the second quarter, marking 64 percent yoy growth.
Xiaomi Indonesia has become the number one smartphone brand in the country with annual sales growth of 112 percent, making it the fastest growing smartphone brand in Indonesia.
Most of our sales came from [the island of] Java. However, the fastest sales growth happened in tier-2 and tier-3 cities outside of Java, the main reason being that many new smartphone users saw affordability as crucial.
What is your strategy to buoy sales amid the pandemic?
I think we just have to listen to our consumers’ needs, try to be creative and adapt to ensure consumer needs are met. During the lockdown period, we started our online shopping program “Mi Shop from Home” and used Instagram to talk about what is available in our catalog.
We also improved after-sales services and customer support, such as [by] allowing customers to mail in their phone for repairs. Consumers really prefer that extra convenience.
Our users are already very internet-savvy, so the reason they gravitate toward Xiaomi rather than other brands is because they are millennials and Gen Zers and they have no loyalty to any brand. They are open to new things and often do their own research online.
So the combination of assessing consumer needs, providing online services and having consumers already gravitating toward our products really helps Xiaomi thrive.
Xiaomi seems to be focusing on the younger demographic. How are you approaching this segment?
We have a new line that we spun out early this year called Poco. So while the Xiaomi series serves the mid- to high-end market and the Redmi line serves the family household, Poco is extremely focused on gamers, Gen Zers and millennials.
In terms of marketing, big brands usually [market] through airports, billboards and TV ads, but Xiaomi rarely dabbles in those. We believe in the community and word-of-mouth, as our loyal users are the best marketers.
We save a lot of money from what would be spent on advertising and reallocate it to our users in the form of cheaper prices, so consumers get to enjoy the benefit and [then] spread the word about the products.
Xiaomi also has one of the biggest and most engaged [and followed] accounts for the electronics industry in Indonesia, and we will take this experience one step further for Poco. So we are engaging with our clients via social media.
We are now entering the fourth quarter. Are there any business goals you want to achieve by the year-end?
There are a few things we would love to improve. First, we would love to see if we can get more products to our female users by marketing our Mi 11 Lite phone. It is the thinnest smartphone in the market today and we released this product in an attempt to attract more female users, as Xiaomi’s consumers are roughly 58 percent male and 42 percent female.
We are also trying to increase the userbase of [our] high-end products, such as the Mi 11 Ultra that is sold at around Rp 16.9 million.
Another thing we are working on is to push sales of our artificial intelligence of things (AIoT), or smart products for homes. I think there is high potential for these [products] in Indonesia, but it is still in the early days.
We are in the process of [establishing] more Xiaomi stores by partnering with [partner] shops. We hope that as we gain influence, more businesses [will] want to become our partners.
What are some of the challenges for the smartphone industry going forward?
One big topic is the global chipset shortage. This [is] due to increasing demand for electric vehicles and crypto mining machines that took some of our supply. So for the remaining months [of] this year, we must navigate to meet as much demand as possible with less supply.
Another challenge is the 5G rollout. It is very clear that Indonesia will take some time to adopt 5G. The question is how fast the government and [mobile network] carriers push it out. Indonesian consumers also [prefer] to wait and see before they switch.
As a brand, we need to answer the question of what people want. Are they willing to pay extra to move to 5G or not? Because a 5G chipset is 20 to 30 percent more expensive than a 4G chipset, this makes 5G phones more expensive. However, Xiaomi already has 5G products in the market and in the pipeline.
