Project Report

(Submitted for the Degree of B.Com. Honours in Accounting & Finance

Under the University of Calcutta)

Title of the project:-

Marketing Strategy of Xiaomi

Submitted by:

Name of the Candidate : Roshan Somani

Registration No : 017-1111-1110-17

CU Roll No. : 171017-21-1319

Name of the College : THE BHAWANIPUR EDUCATION SOCIETY COLLEGE

College UID : 0101170962

Supervised by:

Name of the Supervisor: Prof. Souvik Mazumder

Name of the College: THE BHAWANIPUR EDUCATION SOCIETY COLLEGE

Month & Year of Submission

April ,2020

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Annexure- IA

Supervisor's Certificate

This is to certify that Mr. Roshan Somani ,student of B.Com. Honours in Accounting &
Finance of The Bhawanipur Education Society College under the University of Calcutta
have worked undermy supervision and guidance for his Project Work and prepared a
Project Report with the title,“Marketing Strategy of Xiaomi” which he is submitting,
is his genuine and original work to the best of my knowledge.

Signature:
Place: KOLKATA
Date:
Name: Prof. SOUVIK MAZUMDER
Designation: LECTURER
Name of the College: THE BHAWANIPUR EDUCATION SOCIETY COLLEGE

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Annexure- IB

Student's Declaration

I hereby declare that the Project Work with the title “Marketing Strategy of Xiaomi”
, submitted by me for the partial fulfillment of the degree of B.Com. Honours in
Accounting & Finance under the University of Calcutta is my original work and has not
been submitted earlier to any other University / Institution for the fulfillment of the
requirement for any course of study.
I also declare that no chapter of this manuscript in whole or in part has been incorporated
in this report from any earlier work done by others or by me. However, extracts of any
literature which has been used for this report has been duly acknowledged providing
details of such literature in the references.

Place: Kolkata Signature:

Date:

Name:
Registration No:
Roll No:
UID:

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 ACKNOWLEDGEMENT

To make any project, essential requirement is able guidance and references without
which project is incomplete. The success and final outcome of this project required a lot
of guidance and hardwork but it’s an honour to acknowledge the help of those who
helped me in completing the project successfully.
I would like to thank the Head of the Department. I take this opportunity to express my
profound gratitude and deep regards to my guide Prof. Souvik Mazumder, for his
exemplary guidance, monitoring and constant encouragement throughout the course of
this thesis. The blessing, help and guidance given by him time to time shall carry me a long
way in the journey of life on which I am about to embark. I thank him for his overall
support.
My thanks and appreciations also go to our college librarian’s in developing the project
and people who have willingly helped me out with their abilities.
I am thankful to and fortunate enough to get constant encouragement, support and
guidance from all Teaching staffs of Department of Commerce which helped us in
successfully completing our project work.

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 TABLE OF CONTENTS

Serial Particulars Page no

no.

1. Chapter 1
1.1 Marketing Introduction
1.2 Background of the study
1.3 Literature review
1.4 Objective of the study
1.5 Research methodology
1.6 Limitation of the study
2. Chapter 2
2.1 National scenario
2.2 International scenario
2.3 Company’s profile
3. Chapter 3
3.1 Primary data analysis
3.2 Secondary data analysis
3.3 Findings
3.4 SWOT analysis
4. Chapter 4
4.1 Scope of the study
4.2 Conclusions
4.3 Recommendation
5. Chapter 5
5.1 Bibliography

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 CHAPTER 1
INTRODUCTION
Xiaomi
Type: Private Limited
Industry: Consumer electronics, Computer hardware
Founded: 6th April 2010
Headquarter: Haidian District , Beijing, China
Key people: LEI JUN (MD & CEO),
MANU KUMAR JAIN (MD and CEO)
Products: Mobile phones, TV, Fitness band, lifestyle products, mi box

Introduction to marketing strategy:-

Marketing refers to activities a company undertakes to promote the buying or selling of a product
or service. Marketing includes advertising, selling, and delivering products to consumers or other
businesses. Some marketing is done by affiliates on behalf of a company. Professionals who work
in a corporation's marketing and promotion departments seek to get the attention of key
potential audiences through advertising. Promotions are targeted to certain audiences and may
involve celebrity endorsements, catchy phrases or slogans, memorable packaging or graphic
designs and overall media exposure. Marketing as a discipline involves all the actions a company
undertakes to draw in customers and maintain relationships with them. Networking with
potential or past clients is part of the work too, and may include writing thank you emails, playing
golf with prospective clients, returning calls and emails quickly, and meeting with clients for coffee
or a meal.

Key Takeaways:-

• Marketing refers to all activities a company does to promote and sell products or services
to consumers.

• Marketing makes use of the "marketing mix," also known as the four Ps—product, price,
place, and promotion

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 • At its core, marketing seeks to take a product or service, identify its ideal customers, and
draw the customers' attention to the product or service available.

At its most basic level, marketing seeks to match a company's products and services to customers
who want access to those products. Matching products to customers ultimately ensures
profitability.

Product, price, place, and promotion are the Four Ps of marketing. The Four Ps collectively make
up the essential mix a company needs to market a product or service. Neil Borden popularized
the idea of the marketing mix and the concept of the Four Ps in the 1950s.

PRODUCT:-

Product refers to an item or items the business plans to offer to customers. The product should
seek to fulfill an absence in the market, or fulfill consumer demand for a greater amount of a
product already available. Before they can prepare an appropriate campaign, marketers need to
understand what product is being sold, how it stands out from its competitors, whether the
product can also be paired with a secondary product or product line and whether there are
substitute products in the market.

PRICE:-

Price , refers to how much the company will sell the product for. When establishing a price,
companies must consider the unit cost price, marketing costs, and distribution expenses.
Companies must also consider the price of competing products in the marketplace and whether
their proposed price point is sufficient to represent a reasonable alternative for consumers.

PLACE:-

Place, refers to the distribution of the product. Key considerations include whether the company
will sell the product through a physical storefront, online, or through both distribution channels.
When it's sold in a storefront, what kind of physical product placement does it get? When it's sold
online, what kind of digital product placement does it get?

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PROMOTION:-

Promotion, the fourth P, is the integrated marketing communications campaign. Promotion

includes a variety of activities such as advertising, selling, sales promotions, public relations, direct
marketing, sponsorship, and guerrilla marketing. Promotions vary depending on what stage of the
product life cycle the product is in. Marketers understand that consumer associate a product’s
price and distribution with its quality, and they take this into account when devising the overall
marketing strategy.

1.2 – BACKGROUND OF THE STUDY:-

In the last 5 years it has been observed that the smart phone industry has grown exponentially.
Long gone is the time when the consumers needed to carry 2-3 kg laptops for their daily
requirements. Nowadays big brands like Xiaomi have been adopting the strategies of hunger
marketing where the availability of the product is intentionally restricted by the manufacturer to
create surplus demand in the market. A major change has been identified in the usage pattern of
consumers which has been strategically tapped by companies. Xiaomi Corporation was founded
in April 2010 and listed on the Main Board of the Hong Kong Stock Exchange on July 9, 2018
(1810.HK). Xiaomi is an internet company with smart phones and smart hardware connected by
an IOT platform at its core. With the vision of being friends with its users and being the “coolest
company” in the hearts of its users. Xiaomi is committed to continuous innovation, with an
unwavering focus on quality and efficiency. The company relentlessly builds amazing products
with honest prices to let everyone in the world enjoy a better life through innovative technology.
Xiaomi is currently the world's fourth-largest smart phone brand, and has established the world's
largest consumer IOT platform, with more than 213.2 million smart devices (excluding smart
phones and laptops) connected to its platform. Currently, Xiaomi products are present in more
than 90 countries and regions around the world and have a leading foothold in many markets.
Xiaomi has expanded and established itself as a valued startup and it has a chance of becoming
the world's top most smart phone company. There are two basic competitive strategies followed
by Xiaomi that are manufacturing products with superior qualities and features and produced at
a lesser cost. In addition, there are certain extra features that are present in Xiaomi phones that

8
drive the attention of the customers towards it. Before launching its phone, the company had
surveyed the market aggressively and analyzed the competitive strategies of smart phone giants
like Apple and Samsung. Those were having strong customer loyalty having a robust operating
system that is Android. Android was chosen as the operating system and Xiaomi designed MI UI
its own customized operating system based on Android with added cloud services, security, apps,
music, video player, browser and many more common items. The core competitive strategies
adopted by Xiaomi competitive cost, quick expansion in the offshore markets, less margins and
selling products online exclusively. Indian market is very diverse and large and it is difficult to
penetrate it in one go hence Xiaomi chose a narrow segment to cater initially which aspired to
produce a great product but at the same time at lower costs for the cost conscious customers.
These are the following market strategies adopted by Xiaomi.

• Innovating the products

• Focusing on aggressive pricing and maintaining high quality standards
• Minimum investment on conventional advertising
• Loyal fan base
• Earning revenue from the software
• The methods of flash sale

• Innovating the products:-

Xiaomi always believed in a system in which there is continuous innovation not only for their
operating system but also for their marketing strategies and programs. The products mainly smart
phones manufactured by the company are of superior quality and their aimed to provide value
for money proposition to their customers its sub brands known as MI and Red mi have been
delivering great value for money smart phone models. Some of its famous mobile phones were
4S, MI 4 and Redmi Note 3. These mobile phones had rocked the market with huge sales and
continue to do so with their latest upgraded models being released regularly by the company.
Redmi Note 3 as per IDC was the highest shipped device in the history of online smart phone
industry with more than 2.4 million within 6 months.

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 • Focusing on aggressive pricing and maintaining high quality standards:-

Initially, the markets were dominated by the smart phone giants like Samsung and Apple, and
local players of the specific market and Xiaomi had realized that it is very difficult to compete with
them and hence had to focus on expanding its customer base by providing high quality products
and charging low premium for them. Xiaomi did this by offering limited number of products
toward targeted customer base of range 10000 -15000 rupees in Indian market by reducing its
advertisement cost by adopting the online advertisement strategies. Another way of reducing the
price was exclusive partnership with online retailers like Flipkart and Amazon that reduced the
logistic costs. These online retailers also had history of consumer satisfaction and trust which was
also utilized buy Xiaomi.

• Minimum investment on conventional advertising :-

Xiaomi was one of the few brands which promoted a unique marketing approach to appeal the
market it was the brainchild of CEO of the company Lei Gen. Word of mouth publicity was used
as it was believed by the company that satisfied customers create positive vibes in the market and
it is also a cost effective way to penetrate into the other international markets. Minimum
expenditure was made on traditional advertising and instead social media; online forums were
used to connect with the target audience. The engineers of Xiaomi had direct contact with the
consumers and hence helped them to gather useful information to overcome the difficulties and
modify the software according to the consumer needs. Another plus point with Xiaomi was that
it advertised itself as a consumer friendly brand with establishment of customer care centers
which catered the problems and continuously improve upon them.

• Loyal fan base:-

Xiaomi had created a huge fan following who were the early adopters and the first ones to buy
MI UI smart phones they were known as MI - fans these were the people mainly consisting of
bloggers, patrons who constantly created buzz on the internet about the company, its products
and services it provided. China had a micro blogging platform with more than 400 million
subscribers known as Sina Weibo and it was used as a medium for promotion. The company saw

10
the potential of the app and decided to sell phones directly from it. Now a days Xiaomi uses online
channels like Flipkart, Snapdeal and Amazon for advertisement and selling of products to its target
customers. Customers being the most important aspect also involve themselves completely in
designing and development process where their inputs are taken through the online mediums
such as social media sites, micro blogging platforms and are incorporated suggesting changes in
the new products.

• Earning revenue from the software:-

This strategy used by Xiaomi was one of its most effective strategies executed. Xiaomi, having
excellent software based on Android having a customer base of more than 50 million users,
Xiaomi developed its own themes, games and apps which work pre-installed on MI UI and
helped contribute more than 6 million sales revenue on a monthly basis. Just like Amazon and
other e-commerce Xiaomi worked and aspired to earn profits via its ecosystems and
marketing various goodies. In recent times Xiaomi has allowed advertisement into sum of its
apps installed on MI UI that further help generate revenue and has received mixed response
from the consumers as well as critics.

• The methods of flash sale:-

Older and more established brands like HTC, Samsung, Apple and many more local players make
their products available in the market through third party retailers and stores but on the other
hand Xiaomi does not follow this method and sells its products via online flash sales. In these flash
sales a limited quantity of product is available for sale at a particular time, and the sale continues
till the stock lasts with an intention to encourage customers to go for impulse buying. The limited
quantity also motivates the customers to buy the product on spot this method increases the
profits of the company, prevent the hoarding of stock and over production. The main advantage
of flash sales is that it aids in inventory management avoid the over production and create
scarcity. For example, a flash sale of company in which Xiaomi launched MI 4. It went on sale via
Flipkart in 2015 and in the first flash sale the demand of the mobile exceeded it supply by at least
10 times. Today also Xiaomi is using the same technique to gather customers by creating limited
supply of their product making eagerness of their product in the market and creating higher

11
demands among their mi fans or customers, their new product mi note 9 pro and mi note 9 pro
max creating higher demand in the market , not only in phones they use this technique while
selling their fitness bands too in the market through which they get impressive result and love
from their customers.

Figure 1:- Methods of flash sale

amazon
36%

flipkart
53%

mi
11%

https://www.91mobiles.com/hub/xiaomis-mi-com-tops-online-smartphone-sale-channel-chart-
india/

1.3:- LITERATURE REVIEW

Xiaomi is a privately owned Chinese electronics design and manufacturing company.

Founded by Lei Jun in 2010, the company has its headquarters in Beijing and comes about the
fourth on the list of the top Smartphone makers in the world. Its consumer electronics and
computer hardware products are some the fastest moving in China. The rate at which Xiaomi
is growing is alarming to Samsung and Apple as the company has almost managed to position

12
itself as the top Smartphone spot in China. Hitesh Bhasin, (January 25, 2019)In this research in
literature review, researcher will describe the theoretical ofmarketing mix, marketing strategy of
Xiaomi mobile phone, marketing mix of Xiaomi mobilephone, good quality product of Xiaomi
mobile and low price, pricing strategy of Xiaomimobile, Place or distribution strategy of Xiaomi
mobile, promotion strategy of Xiaomi mobile,making decision of customers, customer satisfaction
and measuring customer satisfaction of Xiaomi mobile phone and related research theory. “Apple
doesn’t really care about what the user want . They imagine what the user want. Xiaomi is
different” – LIE JUN , CEO and Founder Xiaomi with this statement of Xiaomi’s founder they
created a massive impact on the customers with their technology and imense success in their
technical field.

1.4:- OBJECTIVE OF THE STUDY

• To study the future strategies of Xiaomi

• To find the past sale growth and demand analysis

• SWOT analysis

• To study the marketing strategies and brand loyalty of Xiaomi

• To study the marketing mix of Xiaomi with respect to attributes such as brand loyalty and
come up with recommendations as to what all needs to be considered keeping the
consumers in mind.

• To analyze the Xiaomi competitors and compare their strategies and come up with the
recommendations for any problem being faced by it.

• To find out the new ways to increase the profit of the company.

• To show how Xiaomi has make Digital India

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 • To study how Xiaomi is giving benefits to the society and contribution to the environment
as well.

1.4- RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. Research

methodology constitutes of research methods, selection criterion of research methods, used in
context of research study and explanation of using of a particular method or technique so that
research results are capable of being evaluated either by researcher himself or by others. Why a
research study has been undertaken, how the research problem has been formulated, why data
have been collected and what particular technique of analyzing data has been used and a best of
similar other question are usually answered when we talk of Research methodology concerning a
research problem or study. The main aim of research is to find out the truth which is hidden and
which has not been discovered as yet.

A sample design is a definite plan for obtaining a sample from a given population. It refers to the
techniques or the procedure the researcher would adopt in selecting items for the sample. Sample
design may as well be drawn from the population to be included in the sample i.e. the size o To

know the response, I have used the questionnaire method. If one wishes to find what
Xiaomi care consultants think or know, the logical procedure is to ask them. This has led
marketing researchers to use the questionnaire technique for collecting data more than
any other method.

To know the response, I have used the questionnaire method. If one wishes to find what
Xiaomi care consultants think or know, the logical procedure is to ask them. This has led
marketing researchers to use the questionnaire technique for collecting data more than
any other method.

In this method questionnaire were distributed to the respondents and they were asked
to answer the questions in the questionnaire. The questionnaire were structured non
disguised questionnaire because the question which the questionnaire contained, were

14
arranged in a specific order besides every question asked were logical for the study, no
question can be termed as irrelevant.

The questionnaire was non-disguised because the questionnaire was constructed so that
the objective is clear to the respondent. The respondents were aware of the objective.
They knew why they were asked to fill the questionnaire.

With the help of following techniques, which are using by Xiaomi I analyze that the how
techniques of sales promotion are useful.

DATA COLLECTION

PRIMARY DATA SOURCES

• Through interaction with Xiaomi care consultant

• Through questionnaires filled from the Xiaomi care consultant

SECONDARY DATA SOURCES:

• Through Internet, various official sites of the companies.

• Through pamphlets and brochures of the companies
• Journals & Magazine.

Here project analysis is made by collecting secondary data from different websites, journals,
etc.

• Secondary data’s are pre published and research data’s collected from different
websites, journals, newspapers, company research papers.

• These documents and data’s are very useful for the theoretical, conceptual and
organizational background analysis.

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 • Detailed analysis of data’s is made by plotting different graphs and tables which can
be easily understandable.

• Then by observing these graphs we have made our conclusions and

recommendations.

1.6:- LIMITATION OF STUDY

This study has also some limitations and they must be acknowledged. The major limitations of the
study are that respondents’ bias cannot be judged and small sample size. The result of present
study cannot be generalized to India as it has covered only Kolkata City.The present paper is
entirely emphasize on only Xiaomi products. Similar study can also be undertaken for other youth

centric consumer and durable products.

CHAPTER 2:-CONCEPTUAL FRAMEWORK

2.1 :- NATIONAL SCENARIO

The Chinese giant, who has held the top smart phone vendor position in India for eight straight
quarters said budget smart phone series Redmi and Redmi Note have been its top selling lineups
in the nation. In India, the world’s fastest growing and second largest smartphone market, most
handsets ship with a price tag below $200. Xiaomi, whose phones punch above their price class,
has strictly adhered to the budget-conscious market from the day it began operations in India.
The company says it never makes more than 5% profit on any hardware product it sells. In a
statement, Manu Jain, VP of Xiaomi and MD of the company’s India business, said the company’s
milestone today “is a testament to the love we have received from millions of Mi Fans since our
inception. There have been brands who entered the market before us, yet are nowhere close to
the astounding feat we have achieved.” Shipping 100 million smartphones in India alone is a
remarkable feat for Xiaomi, which operates in dozens of markets. The company last year shipped

16
100 million handsets in about 10 months worldwide (India included) in what was a record for the
company. As competition in its home nation intensifies and smartphone shipments slow or
decline everywhere, India has emerged as the most important market for Xiaomi in recent years.
When the Chinese firm entered the nation, for the first two years, it relied mostly on selling
handsets online to cut overhead. But in the years since, it has established presence in brick-and-
mortar markets, which continues to drive much of the sales in the nation. (India is also one of the
handful of places where smartphone shipments continue to grow.) Last month, Xiaomi said the
company was on track to building presence in 10,000 physical stores in the country by the end of
the year. It expects offline market to drive half of its sales by that time frame. Xiaomi says it has
created more than 20,000 jobs in India, the vast majority of which have been filled by women.
Even as smartphones continue to be its marquee business in India, Xiaomi has also brought a
range of other hardware products to the nation and has built software services for the local
market. The company has also donned the hat of an investor, backing a number of startups,
including local social network ShareChat, which recently raised $100 million from Twitter and
others fintech startups KrazyBee and ZestMoney and entertainment app maker Hungama.In
recent interviews with TechCrunch, Xiaomi executives said they have a dedicated team in India
that closely looks for investment opportunities in local startups. “We believe this is just the
beginning of a brand new chapter, and we will continue to bring in more categories and products
with best specs, highest quality at honest pricing for all our Mi Fans,” Jain said Samsung, which
once led the Indian smartphone market, has launched a handful of handset models across various
price points to better compete with Xiaomi. It has also ramped up its marketing budget in the
nation. Xiaomi, which spends little on marketing, remains on top. Samsung entered India more
than a decade ago and has also shipped more than 100 million smartphones in the country,
research firm Counterpoint told TechCrunch. Xiaomi is only the second smartphone vendor to
achieve this feat, said Tarun Pathak, an analyst with the research firm. Five years ago it would
have been unthinkable that global giant and India's favourite phone company Samsung could be
overthrown as the king of smartphones in India. It had superb brand recall. It was a distribution
juggernaut. Its phones were hugely aspirational. And yet, a little known Chinese company called
Xiaomi snuck its way into India and established a beachhead in 2016. India had not yet woken up
to the Xiaomi machine as China had. In fact, it was widely dubbed 'the poor man's iPhone,' Its
game was online flash sales, and so adept was it in whipping up a frenzy amongst Indians with its
rock-bottom $100-$200 Redmi phones that had everything a $500 marquee smartphone

17
seemingly had that it created an immediate sensation in the Indian market. Its market share in
2016 quickly inched up to 3%, but it was still a minnow to the 25% Samsung market share whale.
Since very little of India was online, let alone consuming things via the internet, the strictly-online
Xiaomi was viewed as an interesting company -- a rebel, a little cheap, and not quite in the same
league as a Samsung. Well that certainly changed, and at warp speed. Today, Xiaomi has
swallowed roughly 28% of the Indian market while Samsung is lower at around 25 or 26%. Of
course, figuring out who's ahead of whom is a fool's game in the rapidly shifting sands of
a commoditised product that can by and large be assembled from off-the-shelf plug-and-play
items like cameras, processors and gorilla glass. Market watchers evaluate the arena based on
volume of units shipped, others on value of the phones. Today's leader can be tomorrow's
laggard. Yet, Xiaomi has consistently eaten up market share like a relentless machine, while
Samsung still floats pretty much around the same numbers going up and down by a few
percentage points. How did such an upheaval take place in such a short period of time? The
immediate answer could be value. Today, over 66% of India's market is swamped by Chinese
brands, but Xiaomi was the first to offer dazzling phones at such low prices that Indians couldn't
believe their luck. They thronged sites like Flipkart, desperate to be the chosen few who were
able to click that mouse fast enough to bag one of these babies. And you had to be fast -- tens of
thousands of phones disappeared off virtual shelves in less than eight seconds. Certainly, the
Indian brands like Micromax and Intex couldn't stand a chance despite their impressive albeit
temporary gains in the early smartphone wars. First, they failed to innovate in a deeply
commoditised market like the Chinese and the Japanese were doing. Then, around 2017, they
made the lethal mistake of not going the 4G route when the smart money was doing so. Almost
overnight, they were toast. In an era of flamboyant nationalism in India, seven out of ten of us in
all likelihood will be carrying around -- and lets let the irony soak in for a second or two -- phones
from our historical 'arch enemy', China, with whom we have had a difficult relationship to say the
least. The next piece of the puzzle that Xiaomi solved was by going after the offline market like a
pit bull after they had so effortlessly conquered the online one. One in two phones sold on the
internet is a Xiaomi. In 2017, it started putting up pop-up stores at large format electronic
retailers, then its own multi-brand 'Preferred Partner' stores where they cleverly sold their own
phones along with others to pad their per-outlet revenues, and then their exclusive Mi Home
stores. This way, it managed to garner market share in tier-2 and tier-3 towns without spending a
ton on a traditional, exclusive distribution strategy like, say, Samsung With a record shipment of

18
36.9 million phones flogged in the second quarter of 2019 and growth rates still sky high, Xiaomi
seems destined for great things. Yet, the fickle ways of the smartphone business is such that a
year may cough up a whole different market scenario. Xiaomi's fellow Chinese rivals -- Oppo, Vivo
and Huawei -- have also flooded the Indian market, though not with the same impressive strides
as Xiaomi. Many of them are focused on niche segments of the market. Ultimately, it's such a
hotly contested space that things could change very quickly with many future Xiaomi's wading in
for a piece of the action. And then there is Samsung, which is not exactly going to disappear
anytime soon. In fact, it has climbed three percentage points, from 23 to 26% in the last year --
and its retail reach and after-sales service network, not to mention its aspirational brand, are all
still a big draw. Which means that Xiaomi has its work cut out for it in defending its gains. For now
though, it can call itself the undisputed king of Indian smartphones.India is a country of 1.36 billion
people. In this country different classes of people are their rich, poor, middle class every one has
been connected to this digitalized India with smart phones and internet connection . A china
based country named as Xiaomi has been entered in India with its name “MI” The Chinese giant,
who has held the top smart phone vendor position in India for eight straight quarters said budget
smart phone series Redmi and Redmi Note have been its top selling lineups in the nation. In India,
the world’s fastest growing and second largest smartphone market, most handsets ship with a
price tag below $200. Xiaomi, whose phones punch above their price class, has strictly adhered
to the budget-conscious market from the day it began operations in India. The company says it
never makes more than 5% profit on any hardware product it sells. In a statement, Manu Jain, VP
of Xiaomi and MD of the company’s India business, said the company’s milestone today “is a
testament to the love we have received from millions of Mi Fans since our inception. There have
been brands who entered the market before us, yet are nowhere close to the astounding feat we
have achieved.” All this have been possible just because of Xiaomi VP manu kumar jain who knows
the market stratergy of Indian market and also knows what the youth wants in this type of
digitalized country, so xiaomi has performed immersive work with their product Xiaomi has been
the very first company to launch a mobilephone in india Mi note 3 with snapdragon qualcom
processor, afterwards it keep on developing and innovating more new phones with diffent
features in it , it is also the very first company who have launched a 4g mobile phones in India
with an impressive success on digitalized network xiaomi also lauches its TV, fitness band, power
banks, audible products, home appliances, lifestyle products , luggages and backpacks, chargers
& cables and case & protectors. Xiaomi is Indias first company to lauch helioc mediatec processor

19
in their phones for game lovers and also the very first company who is providing NAVIc( India’s
satellite system) support to their users in their latest phones ranging from 12k- 15k at a very
reasonable price.

2.2:- INTERNATIONAL SCENARIO

We achieved great success in our business expansion in international markets for the year ended
December 31, 2018. Our revenue from international markets grew 118.1% year-on-year to
RMB70.0 billion during the year ended December 31, 2018, which accounted for 40.0% of our
total revenue for the same period, compared with 28.0% for the year ended December 31,
2017.International shipments of our smartphones continued to demonstrate strong growth
momentum.According to Canalys, our smartphones achieved the number one market share
position by shipments for six consecutive quarters in India, with year-on-year growth of 59.6% for
the year ended December 31, 2018.In Indonesia, we were ranked second in terms of smartphone
shipments for the year ended December 31, 2018, with year-on-year growth of 299.6%. Our
smartphone shipments for Western Europe grew 415.2% year-on-year and we were ranked fourth
in terms of smartphone shipments for the year ended December 31, 2018.
Our IoT business also achieved good progress in its expansion in international markets. It will
become an increasing important contributor to our international revenue growth.
Xiaomi Corporation (“Xiaomi” or the “Group”; Stock Code: 1810), an internet company with
smartphones and smart hardware connected by an Internet of Things (“IoT”) platform at its core, today
announced its audited consolidated results for the year ended December 31, 2018 (“FY2018”). The
Group recorded a strong revenue of approximately RMB174.9 billion, representing a year-on-year
increase of 52.6%, among which international revenue grew 118.1% year-on-year to RMB 70.0 billion,
accounting for 40% of its total revenue. Net profit for year 2018 was approximately RMB13.478 billion.
Adjusted net profit (Non-IFRS Measure) grew by 59.5% year-on-year to RMB8.6 billion.

FY-2018 FINANCIAL HIGHLIGHTS

• Total revenue was RMB174,915.4 million, an increase of 52.6% year-on-year

• Gross profit was RMB22,191.9 million, an increase of 46.4% year-on-year

20
• Net profit was RMB13.48 billion

• Non-IFRS adjusted net profit was RMB8,555 million, an increase of 59.5% year-on-year

• Earnings per share were RMB0.843

“In 2018, Xiaomi continued to shine – even in the face of fierce competition from domestic and
international peers – thanks to our unique and powerful “triathlon” business model. During 2018,
our large home appliances business emerged from a nascent vertical to a robust business unit, and
we also entered the white goods market. Besides, 2018 also marked the start of our overseas IoT
business expansion. The strategies to which Xiaomi adheres, such as adopting multi-brand strategy
in our smartphone business, strengthening the performance of the high-end market, accelerating
the development of new retail channels and focusing on AI development and application, all yielded
remarkable results during FY2018. In 2019, we officially launched the “smartphone + AIoT” dual-
engine strategy. With the upcoming 5G deployment, we believe there will be more opportunities
available for AIoT in the future. We expect to invest over RMB10.0 billion in the development in AIoT
in the next 5 years to capture this exciting opportunity. A strong growth across all business segments
in 2018 reinforces our confidence in the business and we are positive that we are able to reach our
full potential in 2019.” In FY2018, Xiaomi’s smartphones segment recorded revenue of
approximately RMB113.8 billion, up 41.3% year over year, which was mainly driven by notable
grown in both smartphone sales volume, and the average selling price (“ASP”). Compared with the
4.1% year-on-year decline of shipments in the global smartphone market, according to IDC
Consulting (Beijing) Ltd. (“IDC”), Xiaomi’s smartphone shipments reached 118.7 million units,
representing an increase of 29.8% over the previous year. Revenue from the IoT and lifestyle
products segment continued to maintain a high speed of growth, surged 86.9% on a year-over-year
basis to RMB43.8 billion. As of December 31, 2018, the global cumulative shipments of its smart TVs
were 8.4 million units, representing a 225.5% year-on-year growth. In addition to smart TVs and
laptops, we achieved outstanding sales performances across multiple product categories such as Mi
Band, Mi Electric Scooter and Mi Robot Vacuum Cleaner. Revenue from the internet services
segment grew by 61.2% year-on-year to RMB16.0 billion. Meanwhile, advertising revenue grew by
79.9% year-on-year to RMB10.1 billion, primarily driven by continuous optimization of
recommendation algorithm, and users’ increasing engagement with Xiaomi’s internet services. The
MAU of MIUI increased 41.7% to 242.1 million in December 2018. In the fourth quarter of 2018,
Xiaomi has successfully increased diversification of internet services revenue with over 30% of

21
 Xiaomi’s internet services revenue was from internet services outside of advertising and gaming
from China smartphones.

Xiaomi adopted a multi-brand strategy for its smartphones in 2018. Xiaomi and Redmi have
become independent brands since January 2019. The Xiaomi brand will focus on pioneering
advanced technologies, establishing itself in the mid- to high-end markets, and building online
and offline new retail channels. The Redmi brand will pursue the ultimate price-performance ratio
and focus on online channels. In addition, Black Shark, Meitu, and POCO brands will target games
users, female users, and tech enthusiasts, respectively. This multi-brand strategy allows us to
serve different user groups more effectively, and to further expand user base. Xiaomi’s
smartphone ASP in Mainland China increased by 17.0% year-on-year, smartphone ASP in
international markets also increased by 9.7% year-on-year. Xiaomi’s IoT platform continues to grow
and maintain a leading position in the industry. As of December 31, 2018, the number of connected IoT
devices (excluding smartphones and laptops) on Xiaomi’s IoT platform reached approximately 150.9
million units, a quarter-over-quarter increase of 14.7% and a year-on-year increase of 193.2%.Xiaomi
greatly enhanced the user experience of IoT devices through the empowerment of AI. As of December
31, 2018, its AI assistant (“小爱同学”) had more than 38.8 million monthly active users (“MAU”),
making it one of the most used AI voice interactive platforms in mainland China. Xiaomi will further
encourage increasingly more third-parties to join this open IoT platform and will continue to enrich the
AIoT platforms by connecting more devices, providing more use cases.2018 marked the
commencement of Xiaomi’s overseas IoT business expansion with smart TVs launched in India in
February 2018 and were ranked first in terms of online TV shipments in this market during
2018.International revenue surged by 118.1% year-on-year to RMB70.0 billion, accounted for 40.0% of
total revenue, 12ppts higher than its contribution last year. According to Canalys, Xiaomi’s smartphone
shipments for Western Europe grew 415.2% year-on-year and were ranked fourth in terms of
smartphone shipments in 2018.Its smartphone shipments for India continued to demonstrate strong
growth momentum and achieved the number one market share position for six consecutive quarters.
In Indonesia, Xiaomi was ranked second in terms of smartphone shipments with year-on-year growth
of 299.6%. As an innovation-driven technology company, Xiaomi will continue to work on
fundamentals; strengthen its capabilities in innovation, quality control and supply chain management;
and promote its multi-brand strategy. With the upcoming 5G deployment in 2019, the Group will

22
continue to invest in the development of its open AIoT platform, which is believed that there will be
more scenarios available for AIoT in the future.To further expand its global footprint, Xiaomi will
continue to enter additional markets in 2019 and replicate the success in India in other key markets
such as Indonesia and Western Europe.The Group will focus on building efficient new retail channels
by continuously strengthening its distribution capabilities and building an omni-channel, full-scene new
retail network that delivers comprehensive product categories. While maintaining leading position in
the e-commerce market, Xiaomi will also continue to optimize its offline distribution to further
strengthen its advantage in efficiency.The Group will further enhance and optimize its internet services
in mainland China, and continue to expand its client base. Meanwhile, Xiaomi will actively expand its
fast-growing IoT device-based internet services, such as TV internet services and overseas internet
services, and continue to grow the services that have the potential to expand to non-Xiaomi
smartphone users, such as internet finance and the Youpin e-commerce platform.

2.3:- COMPANY PROFILE

Xiaomi Corporation was founded in April 2010 and listed on the Main Board of the Hong Kong Stock
Exchange on July 9, 2018 (1810.HK). Xiaomi is an internet company with smartphones and smart
hardware connected by an IoT platform at its core. With the vision of being friends with its users and
being the “coolest company” in the hearts of its users, Xiaomi is committed to continuous innovation,
with an unwavering focus on quality and efficiency. The company relentlessly builds amazing products
with honest prices to let everyone in the world enjoy a better life through innovative technology. Xiaomi
is currently the world’s fourth-largest smartphone brand, and has established the world’s largest
consumer IoT platform, with more than 150.9 million smart devices (excluding smartphones and laptops)
connected to its platform. Currently, Xiaomi products are present in more than 80 countries and regions
around the world and have a leading foothold in many markets.

23
 CHAPTER 3:- ANALYSIS AND FINDINGS

3.1:- PRIMARY ANALYSIS

Q1 . Are you using a smart phone ?

Yes 48

No 2

Interpretation: All respondents 48 were using the Smartphone and 2 were not using the
smartphone i.e 50 which will be the actual sample size of the study.

24
Q.2. Which price slab do you consider while you purchase a smart phone ?

Smart phones Respondents

10k - 15k 10

15k - 20k 19

20k - 25k 8

25k – 30k 5

Above 30k 8

Interpretation:- As we know India is very sensetive about price segment but here I see most
of them are wish to buy their phone within the range of 15K – 25K from this survey I got to know
that beside price their main segment while buying phone is features, durability,design,etc.

25
Q.3 which smart phone are you uing currently ?

Smart phones Respondents

Samsung 8

Apple 9

Xiaomi 12

One plus 6

Vivo 4

Real me 5

Oppo 2

Other 4

26
Interpretation:- This survey shows that Xiaomi has left behind its two most biggest
competitors i.e samsung and apple just because of its price segment.

Q4. what are the things you look into while purchasing a smart phone ?

Attribute Most important

Price 23

Features 33

Looks 17

Brand name 26

OS 22

Camera performance 24

Interpretation:- This survey shows that customers mostly care about the features .
customers want a fully loaded featured smartphones at a reasonable price with a brand name
security .

27
Q5. satisfying aspects in your current mobile ?

Attribute Most important

Price 23

Camera performance 38

Features 34

Design 22

Brand name 27

Other 2

Interpretation:- In this survey we get to know that customer are very satisfied with their
current smartphone camera performance as well as with their features.

28
Q6. Which promotional offer attracts you most ?

Attribute Most important

Free gifts 15

Extended warranty 18

Discount 16

Other 1

Interpretation:- This survey shows that customers want extended warranty for their
products, this type of promotionals attracts customers.

29
Q7. which media of advertisement influence your purchase ?

Source Respondents

Newspaper 6

Television 11

Magazine 5

Social media 27

Others 1

Interpretation:- This survey shows that social media is the new way for spreading
knowledge information to the customers. 54% of the customers are aware of their products and
brands they like

30
Q8. If your preferred brand is not available for your purchase then what will you do ?

Situations Respondents

Postpone purchase 22

Switch over to other brand 7

Go to the showroom of the brand 4

Search it online 17

Interpretation:- This survey shows the loyalty of the customers for their brand they wish to
purchase

31
Q9. How much you can pay for a xiaomi phone ?

Smart phones Respondents

10k - 15k 27

15k - 20k 13

20k - 25k 7

25k – 30k 3

Above 30k 0

Interpretation:- This survey shows that no one i.e 0% respondent is going to invest their
30k in Xiaomi smartphones , 54 % respondents are ready to invest 10k – 15k through this survey
it means people have trust issue with the company as it’s a new company raising slowly by its
innovation and products it will take time.

32
Q10. Is there anyone except you in your family using Xiaomi phone ?

Yes 29

No 21

Interpretation:- Xiaomi being a budgeted smart phone it is affordable by many i.e it is easy
to buy and almost visible in everyones hand.

33
Q11. Do you shop online ?

Event Respondents

Often 24

Sometimes 22

Never 4

Interpretation:- customers mostly go online for purchasing electronic products or devices

34
Q12. If you shop online, which websites do you choose to shop from?

Websites Respondents

Flipkart 21

Amazon 26

Snapdeal 0

Other 3

Interpretation:- Amazon and Flipkart both are very good websites but respondents trust
amazon more than flipkart so companies should focus which wedsite should they use while
distributing their products . The website which gets more traffic that website only sold goods in a
very fst pase.

35
Q13. Will you purchase other products like tv, ac ,fridge,smart watch , etc of xiaomi if it is
offer at a reasonable price ?

Yes 38

No 12

Interpretation:- This survey shows that people will be interested and would also love to
purchase Xiaomi others products like tv , ac , fridge, computer , smart watch ,etc . if they bring
their products in the market at a reasonable price

36
Q14. will you suggest others to buy xiaomi products?

Yes 36

No 14

Interpretation:- Through this survey the final result is that people will buy Xiaomi products
and also suggest them to others.

37
 3.2:- SECONDARY DATA ANALYSIS

KEY HIGHLIGHTS:-
Audited Three months ended report:-

PARTICULARS JUNE 30, JUNE 30, YEAR-OVER- MARCH 31, QUARTER

YEAR OVER
2019 2018 CHANGE 2019 QUARTER
CHANGE

Revenue 51,951.1 45,235.5 14.8% 43756.8 18.7%

Gross profit 7,258.7 5,651.8 28.8% 5215.6 39.2%

Operating profit/loss 2,336.1 (7,592.0) N/A 3614.1 -35.4%

Profit Before Income tax 2,434.3 14,908.4 N/A 3717.1 -34.5%

Profit for the period 1,955.6 14,632.6 N/A 3191.7 -38.7%

Non-IFRS Measure: 3,635.1 2,116.8 71.7% 2080.7 74.7%

Adjusted net profit

https://company.mi.com/en-us/ir/indexContent/

[1] Not meaningful for comparison due to a one- off gain of RMB 22.5 billion from the fair value
changes of convertible redeemable preferred shares and a one off share based compensation of
RMB9.9 billion in the second quarter of 2018

38
 Audited six months ended report:-

Particulars June 30,2019 June 30,2018 Year over year

change

Revenue 95708.0 79647.8 20.2%

Gross profit 12474.3 9953.2 25.3%

Operating profit/loss 5950.3 (4227.5) N/A

Profit before income tax 6151.5 8219.4 -25.2%

Profit for the period 5147.3 7605.4 -32.3%

Non– IFRS Measure 5715.8 3816.1 49.8%

Adjusted net profit

https://company.mi.com/en-us/ir/indexContent/

39
Interim Report for the three and six months ended June 30, 2019 to the
shareholders:-

• Overall Financial Performance

In the second quarter of 2019, company recorded RMB52.0 billion in revenue, representing an
increase of 14.8% over the corresponding period of 2018. Gross profit margin increased to 14.0%
from the 12.5% achieved in the corresponding period of 2018. Adjusted net profit by 71.7% to
RMB 3.6 billion. As of June 30, 2019 our total cash resource amounted to RMB51.1 billion. The
“smartphone + a lot” dual engine strate5 that we adopted at the beginning of the year has borne
fruit. Our user base has continued to expand and the number of devices connected to our
platform has continued to grow .In June 2019, monthly active users (“MAU”) of MIUI reached
278.7 million, an increase of 34.7% over the corresponding period approximately 196 million units
as of June 30,2019 representing a year- over- year growth if 69.5% .Meanwhile, our AI assistant
had 49.9 million MAU in June 2019, representing a year-over-year increase of 88.3%.lWe have
won a number of International awards in 2019 to date .It took company only 9 years to debut on
the Fortune Global 500 list of 2019, becoming the youngest company on the list this year.
Futhermore, we made it into the 2019 BrandZ Top 100 most valuable Global Brands ranking for
the first time, ranking 74th with a brand value of US$ 19.8 billion . We have also been recognised
as one of the 2019 Forbes China’s 50 most Innovative Companies.

40
 • Smart phones
Our smartphone segment recorded RMB32.0 billion in revenue in the second quarter of 2019,
representing an increase of 5.0% over the corresponding period of 2018. Our smartphone sales
volume in the second quarter of 2019 reached 32.1 million units. According to Canalys, we ranked
4th globally in terms of smartphone shipments during the second quarter of 2019 and our market
share in terms of global smartphone shipments increased from 9.5% in the second quarter of 2018
to 9.7% in the second quarter of 2019.Our multi-brand strategy continued to yield fruitful results.
Both our Xiaomi brand, which focuses on pioneering advanced technologies, establishing itself in
the mid- to high-end markets, and building online and offline new retail channels, and our Redmi
brand, which is positioned to pursue the ultimate price-performance ratio and focus on online
channels, and have performed well. After the launch of thenew flagship model K20 series under
the Redmi brand, we have established a comprehensive Redmi smartphone product portfolio that
covers a wide price range. In particular, the global sales volume of the Redmi Note 7 series
reached 20 million units as of the date of this interim report, achieving this milestone in only
around 7 months since its launch on January 10, 2019. In addition, the global shipments of the
K20 series already recorded more than 1 million units within the first month of its launch. On July
2, 2019, we launched the CC series under the Xiaomi brand, which includes Mi CC9, Mi CC9e, and
Mi CC9 Meitu Edition. The CC series is positioned as a fashionable series targeting younger
customers. The CC series places an emphasis on being visually appealing in terms of both form
and function, offering a stylish product design and enhanced photography experience. Mi CC9
Meitu Edition is a joint development with Meitu Inc. (“Meitu”) which specifically targets the
female user market. Leveraging our product development and supply chain management
capabilities, as well as Meitu’s image relatedalgorithms and its deep understanding of female
users, the Mi CC9 Meitu Edition offers outstanding photographic experiences, and builds a solid
foundation for our ongoing expansion into more diversified user markets. Our products have been
strongly recognized by the market as a result of the successful implementation of our multi-brand
strategy. The average selling price (“ASP”) of our smartphones has continued to increase,
achieving year-over-year growths of 13.3% and 6.7% in mainland China and overseas markets,
respectively. In the second quarter of 2019, the revenue generated by smartphones sold for
RMB2,000 or more accounted for 32.3% of the total revenue of the smartphones segment.
Following the granting of 5G business licenses in mainland China, 5G technology has officially
started to be implemented for commercial use. The commercialization of 5G technology could

41
potentially lead to a new smartphone replacement cycle and boost the overall demand of the
domestic market. We established a research and development team back in 2016 for advanced
research on 5G technology and are now well-prepared for the commercialization of 5G. The Mi
MIX 3 5G, our first 5G model was already available in various European countries, and our second
5G smartphone model will also be launched in China in the second half of the year. The gross
profit margin of our smartphone segment increased from 3.3% in the first quarter of 2019 to 8.1%
in the second quarter of 2019. During the early transition period from 4G to 5G technology, we
will continue to invest in research and development of relevant technologies while remaining
prudent with our cash flows and profitability. This is in order to strengthen our investment
capabilities to capture the upcoming opportunities upon the widespread adoption of 5G
technology.

• IOT and Lifestyle products

In the second quarter of 2019, revenue of the IoT and lifestyle products segment rose by 44.0% to
RMB14.9 billion over the corresponding period of 2018. Our smart TV business continues to have
a leading edge in both mainland China and overseas markets. In the second quarter of 2019, global
shipments of our smart TVs reached 2.7 million units, representing a year-over-year growth of
41.1%. According to AVC, we ranked 1st in terms of TV shipments in mainland China for the six
months ended June 30, 2019. We ranked 1st in terms of smart TV shipments in India for five
consecutive quarters as of the second quarter of 2019. With our efforts in expanding our smart TVs
globally, we achieved a top 5 position in terms of global TV shipments for the six months ended
June 30, 2019, according to AVC. We have positioned large home appliances as an important
element of our AIoT strategy. We will focus on innovation and product design, offering intelligent
user experiences and promoting the enhanced connectivity and compatibility of our smart home
appliances. For the six months ended June 30, 2019, the shipments of our air conditioners amounted
to approximately 1 million units. At the same time, we have also entered the smart kitchen
appliances market. In the second quarter of 2019, we continued to enrich our IoT product portfolio.
The market share of our laptops has been steadily increasing following the launch of our new
products. On May 28, 2019, the Redmi brand introduced its first 14” slim notebook and enjoyed
widespread popularity. According to IDC Consulting (Beijing) Ltd. (“IDC”), the market share of
our laptops in mainland China in terms of shipments increased from 5.5% in the second quarter of
2018 to 8.7% in the second quarter of 2019. Our Mi Band ranked 1st in the global wearables market

42
in terms of shipments in the first quarter of 2019. Meanwhile, the Mi Band 4 recorded shipments
of more than 1 million units within 8 days of its launch on June 14, 2019. In addition, we have also
launched several new products, including our AI Translator “小愛老師”, Mi Smart Door Lock and
Mi Smart Combo Wash and Dryer Pro, which are supported by our AI assistant “小愛同學”. These
product launches illustrated our continuous pursuit of excellent product design and quality. WeWe
have continued to improve the device-to-device interaction and enhance our users’ smart home
experience. For example, when a user opens the door through a Mi Smart Door Lock, our AI
assistant “小愛同學” will welcome him/her home. At the same time, the Mi Air Purifi er, Mi Air
Conditioner and other smart devices could be switched on automatically. The Mi Smart Combo
Wash Dryer Pro can be operated by the voice control function through our AI assistant “小愛同學
” and can also support automatic detergent dispensing functionality.

• Internet Services
In the second quarter of 2019, our user base continued to expand. The MAU of MIUI rose by 34.7%
year-over-year from 206.9 million in June 2018 to 278.7 million in June 2019. The MAU of MIUI in
mainland China was 115.1 million in June 2019. The MAU of our smart TVs and Mi Box achieved
53.8% year-over-year growth, reaching 22.6 million in June 2019.Revenue from our internet
services segment grew by 15.7% year-over-year to RMB4.6 billion in the second quarter of 2019.
Advertising revenue slightly decreased by 0.6% year-over-year to RMB2.5 billion due to a soft
mainland China advertising market, particularly due to reduced advertising spending from other
internet companies which contributed a meaningful portion of our advertising revenue. Over the
course of the last few quarters, we have continued executing our strategy to diversify our
advertising customer base. Through expanding into more vertical industries, such as finance and
small and medium-sized enterprises, we are developing a more robust and healthy advertising
business to capture more future growth. Revenue from gaming decreased by 4.1% year-over-year
to RMB675.1 million. However, our gaming gross profit increased to RMB408.2 million in the
second quarter of 2019 from RMB212.5 million in the corresponding quarter of 2018,
representing an increase of 92.1%. Our gaming gross profit margin increased from 30.2% in the
second quarter of 2018 to 60.5% in the second quarter of 2019 as we optimized our gaming
distribution and had higher gaming revenue growth from content providers with high gross profit
margin. Our other internet value-added services grew by 89.9% year-over-year to RMB1.4 billion,
primarily due to the strong growth in revenue from our fintech business and Youpin e-commerce

43
platform.We have been focusing on enriching our internet services and content to strengthen our
advertising business. Many of our internet services are leading on our smartphones, our Mi App
Store, Mi Browser, Mi Security, and MiMusic ranked 1st and Mi Video ranked 2nd in their
respective categories in mainland China in terms of MAU on our smartphones in June 2019.
Furthermore, our news feed service ranked 1st in terms of MAU on our smartphones in mainland
China, reaching 71.0 million MAU in June 2019, representing a year-over-year increase of 31.0%.
Our search service also ranked 1st on our smartphones in mainland China in terms of search query
volume in the second quarter of 2019. We developed various entry points for our search function,
including browser, negative one screen, launcher search box, and our AI assistant “小愛同學”.
Leveraging our increasingly diversified services and multi-dimensional data, we are able to further
improve our algorithm and enhance our users’ experience. Services like news feed and search
allow us to diversify our advertising customer base. Internet service revenue outside of
advertising and gaming from mainland China smartphones, including those generated from the
Youpin e-commerce platform, fintech business, TV internet services and overseas internet
services, increased by 108.8% over the corresponding quarter in 2018, accounting for 36.0% of
the total internet service revenue in the second quarter of 2019.For the six months ended June
30, 2019, the gross merchandise volume (“GMV”) of our Youpin e-commerce platform grew to
RMB3.8 billion, representing a year-over-year increase of 113.9%. In June 2019, more than 65%
of Youpin’s GMV came from non-Xiaomi smartphone users. Revenue from our fintech business
increased to RMB792.0 million in the second quarter of 2019, representing a year-over-year
growth of 62.7%. Our current fintech business focuses on consumer loans and supply chain
financing. With our sophisticated risk management model and technology capability, and
extensive user base and supply chain partners, we had a solid business foundation and potential
to grow. In the meanwhile, we are also actively exploring other fintech business opportunities.Our
TV internet services is also fast growing and increasingly diversified. The TV internet services
revenue is mainly generated from advertising, paid subscription and app distribution. In June
2019, we had over 3 million paid subscribers, representing a year-over-year increase of 83.1%.
We offer a variety of membership services, including video membership, sports memberships,
and children membership. Our subscription services have expanded to other non-Xiaomi TVs to
serve a wider user base.With the overseas expansion of our smartphone business, our overseas
internet service revenue also increased significantly. We continued to build and strengthen our
service offerings in overseas markets. In June 2019, our browser ranked 1st among all browsers

44
in India in terms of MAU on our smartphones. In the second quarter of 2019, the average revenue
per user (“ARPU”) in overseas markets recorded a year-over-year increase of 133.0%.

• Overseas Markets
We have revenue from the overseas markets grew 33.1% year-over-year to RMB21.9 billion in the
second quarter of 2019. We will continue to build and expand our new retail channels in the
overseas markets. As of June 30, 2019, there were a total of 520 Mi Home stores overseas,
representing a 92.6% year-over-year growth, of which 79 stores were located in India.
Furthermore, in India, we had more than 1,790 Mi Stores that cater to tier two and rural areas of
India as of June 30, 2019. According to Canalys, in the second quarter of 2019, we ranked among
the top five in over 40 countries and regions in terms of smartphone shipments. According to IDC,
our smartphones have ranked 1st in India in terms of shipments for eight consecutive quarters.
In addition, according to Canalys, in the second quarter of 2019, we ranked 4th in terms of
smartphone shipments for Western Europe, representing a year-over-year increase of 53.2%. We
ranked 2nd in open market channels in Spain in terms of smartphone shipments in the second
quarter of 2019. We have been developing operator channels in Europe. Our flagship
smartphones, such as Mi MIX 3 and Mi 9 series, have been launched in operator channels in the
United Kingdom, France, Spain, Italy and Switzerland.

• Strategic Update

In the second quarter of 2019, we continued the implementation of our “Smartphone + AIoT”
dual-engine strategy and our AIoT platform continued to maintain its leading position. As of June
30, 2019, the umber of connected IoT devices (excluding smartphones and laptops) on our IoT
platform reached approximately 196 million units, representing a year-over-year increase of
69.5%. The number of users who have five or more devices connected to Xiaomi’s IoT platform
(excluding smartphones and laptops) increased to approximate 3 million, representing a year-
over-year increase of 78.7%. In the six months ended June 30, 2019, the shipments of our AI
speakers exceeded 4 million units. In June 2019, our AI assistant “小愛同學” had 49.9 million
MAU, making it one of the most used AI voice interactive platforms in China. In June 2019, 45%
of our AI speaker MAU used voice control to interact with their IoT devices at least once that
month. We continued to open up our AIoT platform to build a more vibrant AIoT ecosystem. Our
Mi Home app had 30.4 million MAU in the second quarter of 2019 and more than half of the MAU

45
in mainland China were from non-Xiaomi smartphone users. We will continue to invest in the
development of our open AIoTplatform to attract more third parties and users to join this AIoT
platform.The Group’s AIoT Strategy committee will further enhance the development of our AIoT
technology, by building a comprehensive AIoT ecosystem, strengthening our research and
development, and realizing synergies across business units to improve our smart devices’
connectivity and user experiences. For example, we continue to develop technologies for files to
be seamlessly transferred between our smartphones and laptops, as well as for intelligent
projection to be enabled between our smartphones and smart TVs.

MANAGEMENT
DISCUSSION AND ANALYSIS:- https://company.mi.com/en-us/ir/indexContent/

Second quarter of 2019 compared to second quarter of 2018

The following table sets forth the comparative figures for the second quarter of 2019 and the second
quarter of 2018

Audited

Particulars Three months ended

June 30, June 30,

2019 2018

Revenue 51951.1 45235.5

Cost of sales (44692.4) (39583.7)

Gross profit 7258.7 5651.8

Selling and marketing expenses (2295.3) (2075.7)

Administrative expenses (723.5) (10456.9)

46
Research and development expenses (1556.1) (1363.6)

Fair value changes on investments measured at fair value through profit or (670.71) 526.9
loss

Share of losses of investments accounted for using the equity method (12.1) (128.5)

Other income 406.4 207.3

Other losses/ gains ,net (71.3) 46.7

Operating profit /loss 2336.1 (7592.0)

Finance income/expense,net 98.2 (32.3)

Fair value changes of convertible redeemable preferred shares ------- 22532.7

Profit before income tax 2434.3 14908.4

Income tax expenses (478.7) 275.8

Profit for the period 1955.6 14632.6

Non-IFRS measure, Adjusted net profit 3635.1 2116.8

47
Revenue
Revenue increased by 14.8% to RMB52.0 billion in the second quarter of 2019 on a year-9ver-
year basis. The following table sets forth companies revenue by line of business in the second
quarter of 2019 and the second quarter of 2018 .

June 30, 2019 June 30, 2018

Particulars
Amount % of total Amount % of total
revenue revenue

Smart phones 32021.0 61.6% 305011.1 67.4%

Iot and life products 14944.7 28.8% 10378.8 22.9%

Internet services 4508.2 8.85 3958.2 8.8%

Others 405.2 0.8% 397.4 0.9%

Total revenue 51951.1 100.0% 45235.5 100.0%

Smart phones
Revenue from our smartphones segment increased by 5.0% from RMB30.5 billion in the second
quarter of 2018 to RMB32.0 billion in the second quarter of 2019, driven by the increase in ASP
of our smartphones. We sold approximately 32.1 million smartphone units in the second quarter
of 2019, compared to approximately 32.0 million units in the second quarter of 2018. The ASP of
our smartphones was RMB998.7 per unit in the second quarter of 2019, compared with RMB952.3
per unit in the second quarter of 2018. The increase in ASP was primarily due to the continuous
optimization of our product portfolio

48
IoT and Lifestyle Products
Revenue from our IoT and lifestyle products segment increased by 44.0% from RMB10.4 billion in
the second quarter of 2018 to RMB14.9 billion in the second quarter of 2019, primarily due to the
strong growth in demand of our smart TVs, air conditioners, and other IoT products such as Mi
Band, Mi Electric Scooter and Mi Water Purifi er. Revenue from smart TVs and laptops, increased
by 30.6% from RMB4.2 billion in the second quarter of 2018 to RMB5.5 billion in the second
quarter of 2019.

Internet services
Revenue from our internet services segment increased by 15.7% from RMB4.0 billion in the
second quarter of 2018 to RMB4.6 billion in the second quarter of 2019, primarily due to the
growth in our other internet value-added services. Our MIUI MAU increased by 34.7% from 206.9
million in June 2018 to 278.7 million in June 2019.

Others
Other revenue increased by 2.0% from RMB397.4 million in the second-quarter of 2018 to
RMB405.2 million in the second quarter of 2019, primarily due to the increase in revenue from
out of warranty service as a result of greater hardware sales as well as increase in revenue from
sale of materials.

49
COST OF SALES
Company cost of sales increased by 12.9% from RMB39.6 billion in the second quarter of 2018 to
RMB44.7 billion in the second quarter of 2019

June 30, 2019 June 30,2019

Particulars Amount % of total Amount % of total

revenue revenue

Smart phones 29431.5 56.7% 28458.9 62.9%

IoT and lifestyle product 13272.8 25.5% 9399.5 20.8%

Internet services 1574.8 3.0% 1473.0 3.3%

Others 413.3 0.8% 252.3 0.5%

Total cost of sales 44692.4 86.0% 39583.7 87.5%

Smartphones
Cost of sales related to our smartphones segment increased by 3.4% from RMB28.5 billion in the
second quarter of 2018 to RMB29.4 billion in the second quarter of 2019 , primarily due to the
increased sale of our smartphones.

IoT and Lifestyle products

Cost of sales related to our IoT and Lifestyle product segment increased by 41.2% from RMB9.4
billion in the second quarter of 2018 to RMB13.3 billion in the second quarter of 2o19, primarily
due to the increased sales of our smart Tvs ,air conditioners ,and other IoT products

50
INTERNET SERVICES
Cost of sales related to our internet service segment increased by 6.9% from RMB1.5 billion in
the second quarter of 2018 to RMB1.6 billion in the second quarter 9f 2019, primarily due to the
increased spending on infrastructure services as a result of higher user traffic and engagement.

OTHERS
Cost of sales related to our other segments increased by 63.8% from RMB252.3 million in the
second quarter of 2018 to RMB413.3 million in the second quarter of 2019, primarily due to the
increased costs of providing out of warranty Services and the increased costs from sale 9f
materials.

GROSS PROFIT AND MARGIN :-

As a result of the foregoing, our gross profit increased by 28.4% from RMB5.7 billion in the second
quarter of 2018 to RMB7.3 billion in the second quarter of 2019. The gross profit margin from our
smartphones segment increased from 6.7% in the second quarter of 2018 to 8.1% in the second
quarter of 2019, mainly due to the popularity of our newly launched smartphone models and
more prudent operations during the early transition period from 4G to 5G technology. The gross
profit margin from our IoT and lifestyle products segment increased from 9.4% in the second
quarter of 2018 to 11.2% in the second quarter of 2019, mainly due to the increased gross profit
margin from our smart TVs business. The gross profit margin from our internet services segment
increased from 62.8% in the second quarter of 2018 to 65.6% in the second quarter of 2019,
mainly due to the increased gross profit margin from our gaming and other internet value-added
services.As a result of the foregoing, our gross profit margin increased from 12.5% in the second
quarter of 2018 to 14.0% in the second quarter of 2019.

SELLING AND MARKETING EXPENSES:-

Company selling and marketing expenses increased by 10.6% from RMB2.1 billion in the second
quarter of 2018 to RMB2.3 billion in the second quarter of 2019, primarily due to the increase in
packaging and transportation expenses, supporting the growth of our hardware business in both
domestic and overseas markets, partially offset by the decrease in advertising expenses.
Promotion and advertising expenses decreased by 13.4% from RMB786.5 million in the second
quarter of 2018 to RMB681.0 million in the second quarter of 2019

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ADMINISTRATIVE EXPENSES
Our administrative expenses decreased by 93.1% from RMB10,456.9 million in the second quarter
of 2018 toRMB723.5 million in the second quarter of 2019, primarily due to the one-off share-
based compensation in the second quarter of 2018. Excluding the one-off share-based
compensation, our administrative expenses increased by 37.2% from RMB527.2 million in the
second quarter of 2018 to RMB723.5 million in the second quarter of 2019, primarily due to the
increase in compensation for administrative personnel as a result of the increased headcount to
accommodate our business growth.

RESEARCH AND DEVELOPMENT EXPENSES

Our research and development expenses increased by 14.1% from RMB1.4 billion in the second
quarter of 2018 to RMB1.6 billion in the second quarter of 2019, primarily due to the expansion
of our research projects and the increase in salaries and bonus relating to our research and
development personnel.

FAIR VALUE CHANGES ON INVESTMENTS MEASURED AT FAIR VALUE

THROUGH PROFIT OR LOSS
Our fair value changes on investments measured at fair value through profit or loss changed from
a gain of RMB526.9 million in the second quarter of 2018 to a loss of RMB670.7 million in the
second quarter of 2019, primarily due to fair value losses of equity and preferred share
investment in the second quarter of 2019

SHARE OF LOSSES OF INVESTMENT ACCOUNTED FOR USING THE EQUITY

METHOD
Our share of losses of investments accounted for using the equity method changed from net
losses of RMB128.5 million in the second quarter of 2018 to net losses of RMB12.1 million in the
second quarter of 2019, primarily due to the decrease in share of loss of iQIYI, Inc (NASDAQ ticker:
IQ) and increase in share of gain of Sichuan XW Bank Corp., Ltd.

52
OTHER INCOME

Our other income increased by 96.0% from RMB207.3 million in the second quarter of 2018 to
RMB406.4 million in the second quarter of 2019, due to the increase of investment income from
short-term investments measured at fair value through profit or loss.

OTHER LOSSES / GAINS, NET

Our other net (losses)/gains changed from net gains of RMB46.7 million in the second quarter of
2018 to net losses of RMB71.3 million in the second quarter of 2019, primarily due to the
recognition of foreign exchange losses for the second quarter of 2019, compared to foreign
exchange gains for the second quarter of 2018.

FINANCE INCOME/EXPENSE, NET

We had a net finance expense of RMB32.3 million in the second quarter of 2018 and a net finance
income of RMB98.2 million in the second quarter of 2019, primarily due to the increase in our
interest income. Our interest income increased primarily due to more bank deposits which
generated higher interest received.

FAIR VALUE CHANGES OF CONVERTIBLE REDEEMABLE PREFERRED SHARES

Changes in the fair value of our convertible redeemable preferred shares were recorded as fair
value changes of convertible redeemable preferred shares. We did not incur fair value changes of
convertible redeemable preferred shares in the second quarter of 2019, compared to a gain of
RMB22.5 billion in the second quarter of 2018. After the completion of the Global Offering, all of
our convertible redeemable preferred shares were automatically converted to our Class B
ordinary shares (“Class B Shares”) and thus in the fourth quarter of 2018 and forward, we will not
incur fair value changes of convertible redeemable preferred shares.

INCOME TAX EXPENSES

Our income tax expenses increased from RMB275.8 million in the second quarter of 2018 to
RMB478.7 million in the second quarter of 2019, primarily due to the improvement of our
profitability from operating activities.

53
PROFIT FOR THE PERIOD
As a result of the foregoing, we had a profit of RMB14.6 billion and a profit of RMB2.0 billion in
the second quarter of 2018 and the second quarter of 2019, respectively.

3.3:- Findings

The company possesses a global sales force. It has excellent distribution network as the brand is
supplied to remote villages and faraway places.

Xiaomi is one of the most admired companies. The desire of the people in the company has
inspired every invention , every product and every breakthrough of the company.

After analysis both the secondary and primary data , it is clear that the Xiaomi products are highly
marketed and in demand as well. Most users trust their products a lot and are committed to
Xiaomi only and are not even ready to try a different brand.

Although after finding the network coverage bandwith problem with the products a lot of
customers are switching to different brand. This has affected the sales ans marketing of Xiaomi
products.

Also the entry of different brand with more reasonable product has effected the sale of Xiaomi to
a great extent.

However, despite all the difficulties and competition Xiaomi products still have a larger customer
base than its competitors . The company has rooted itself as much as than it did when it first
entered the market.

54
 3.4:- SWOT DATA ANALYSIS

STRENGHTS:-

1. Having skilled and experienced workforce in which the professionals from other leading
companies like Google, Microsoft , Kingsoft, and Yahoo are also included

2. It has competent and experienced business units . Have wide distribution and sales network
to expand its business to new existing markets .

3. Providing quality components in smartphones and other products at the most affordable
price , with specification that won’t obsolete till next 12-18 months.

4. Added with strong management Team and has direct consumer sales as well.

5. Use Word of Mouth Advertising rather than other sources

WEAKNESSES:-

1. Online advertisement model and the Word of Mouth advertisement is not as effective as other
sources like TV advertisements or celebrity endorsements. Also Social media marketing is
becoming popular but it is still in under developing stage and it takes time to get success in
online business.

2. Lack of consistencyin bringing more and more professionals in the company , who can gurantee
in success. And logistics issue due to direct consumer selling.

3. Weak After- Sales Service and lack of enough technical staff to carry on their electronic work
and induce new and fresh specifications in it( system updates are rolled out every week in China
)

OPPORTUNITIES :-

1. Adopting Offline sales channel can really help company boost its sales along with the online
Sales channel.

55
 2. Explore new and existing markets while expanding the exhibition of their product, because
they have a huge product line in China

3. Having a huge product line consisting of many smart home devices , they can dominate
Indian market and can create a great In ternet Ecosystem outside China too.

THREATS:-

1. Face strict Government Regulations and the effect gets transferred on manufacturing and
transportation of their products

2. Their Loss Leader strategy is laying a question mark on sustainable future of Company

3. Profitability in future at stake , because many competitors are coming up with affordable
products with handsome specs.

CHAPTER 4:- Conclusion and recommendation

4.1:- Scope of the Study

As mention above of the objective of the study, researcher focus on the marketing strategy such as
product, price, place and promotion that impacts on customer satisfaction of Indian people who use
Xiaomi mobile phone due to the limitation this study. The target population of this research is the
customers in Kolkata who use Xiaomi mobile phone.

4.2:-Conclusion

This paper focuses on Xiaomi, which is a promising challenger in the global smart phone industry.
Although Xiaomi has only a short history, its enactment has been exceptional and noteworthy
According to Lei Jun, “2014 was an important breakthrough in the history of Xiaomi’s
development. It transformed their position in the industry from a challenger to one of defenders
being chased by the entire industry.” Lately, the smart phone sales are amplified for the brand at
a reasonable price as OPPO, VIVO and LENOVO . According to the research, customers consider

56
the stated features above the other features of the phone and hence the manufactures should
give more consideration on making these features enhanced. Xiaomi, as an emerging
multinational in the Indian market, adopted different product and price strategies. The brand was
able to create product and price competitiveness based on low price and high dimensions’
products. New products were hurled almost at cost. This was possible based on its durability and
long product life-time. The amalgamation of software, hardware and networks may be a
armament for catching up to Apple. In Lei Jun’s view, “Xiaomi is a national consumer electronics
brand, the founder of smart home ecology, and a dais for mobile internet content and services.”
Needless to say, these are Xiaomi’s objectives, although they have not yet been fully realized.
Xiaomi’s marketing outlays have been irrelevant compared to Samsung. Xiaomi adopted minimal
marketing expenditures in China, accentuating efficiency through social networks and viral
marketing. In India, the companies’ marketing and promotion approach differed. Xiaomi deployed
off-line market efforts and focus on customer service, such as pre-release of new smart phone
models in India for the first time anywhere in the world, establishing a return goods policy and
using newsprint advertising. Xiaomi expanded in India by on-line distribution channel same, as it
had used in China. The distribution network involved collaborations with Indian online shopping
options including FlipKart, SnapDeal and Amazon. In addition, smart phones were retailed through
the companies’ own online sale platform. With time, the distribution strategy was altered with
the introduction of an offline distribution channel to meet the diverse business environment in
India, where street-level sales remain popular. This initiative was new for Xiaomi and involved join
forces with The Mobile Store and Airtel. Despite a lack of financial competences at that time,
Xiaomi attempted to achieve proficiency in the online/offline marketing. Xiaomi aimed to deploy
a global strategy aimed at efficiency in producing standardized quality product with low price in
India, as was done in China. Political 17 and cultural differences in India prompted Xiaomi to
deploy a localization strategy both in production and marketing. Xiaomi attempted to overcome
the limitations of an emerging multinational by pursuing a transnational strategy that added
efficiency with no additional costs. As a result, Xiaomi has been able to reuse innovation and
knowledge acquired in the local market to gain further efficiency globally.

57
 4.3:- Recommendation

Smartphone company XIAOMI (MI) in India should emphasis on their product quality and brand
image as consumer is mostly prejudiced by these factors while purchasing a smart phone. They
must improve the performance of Smart phones in terms of product attributes such as function,
ease of use, reliability, durability, design, eco-friendliness and consummation. Because it is
important to make a good product attributes in order to get customer loyalty towards Smart
phones. It should spend more on advertisement and promotion which should be interactive and
attaches to consumer on emotional level that will help them to reach wider audience and this will
also enable external factor to consumer in decision making process. The Company should also
unveil more smart phone with customary quality for lower classes as this will benefit the company
to reach more consumer as lower classes population in country are high. Companies should also
focus on tie-up with mobile network companies for mid-range smart phone. This will be
advantageous for companies and for the consumers, in general

Chapter 5:- Bibliography

A bibliography is a list of all of the sources you have used (whether referenced or not) in the
process of researching your work. In general, a bibliography should include:

• the authors' names

• the titles of the works
• the names and locations of the companies that published your copies of the sources
• the dates your copies were published
• the page numbers of your sources (if they are part of multi-source volumes)

1. www.mi.com( global)
2. https://www.academia.edu/30921949/_MARKETING_STRATEGY_OF_SAMSUNG_IN_IN
DIA_SUBMITTED_BY_SEMINAR_PROJECT_IN_PRTIAL_FULFILLMENT_OF_THE_AWARD_O
F_DEGREE_OF_BACHELOR_OF_COMMERCE_HONORS_2015-18.
3. www.researchpublish.com (global)
4. https://www.mi.com/global/about/mediakit
5. https://www.mi.com/global/about/agreement

58
 6. https://www.mi.com/global/about
7. https://www.mi.com/global/about/environment
8. D:\MARKETING EFFECTS OF XIAOMI\2019IR_e.pdf
9. D:\MARKETING EFFECTS OF XIAOMI\2019Q2 (1).pdf
10. D:\MARKETING EFFECTS OF XIAOMI\The Analysis of Xiaomi Mobile Phone Marketing
Strategy-3998 (1).pdf
11. D:\MARKETING EFFECTS OF XIAOMI\four ps.jpg
12. D:\MARKETING EFFECTS OF XIAOMI\swot.jpg
D:\MARKETING EFFECTS OF XIAOMI\swot 2.jpg

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