Xiaomi Technology Co.

Ltd, which is conceived as one of the leading companies in innovative

technology, has achieved great success in China ‘mainland domestic market after four years of operation,
occupying leading the market share and having profound influences on the whole phone industry. Xiaomi
started its internationalization process in 2013 and decided to be an international company.

China's domestic smartphone market is the world's largest smartphone sales market, but after
high-speed growth in the past, the growth rate of smartphone sales has slowed significantly and
has stalled since 2015. The downward trend means that the China’s smartphones market has become
saturated and at the same time, the competitiveness of domestic companies has increased, and the “war
price” among major players has gradually reduced the profitable of the companies leading them to
explore overseas.

However, as presented on the case Xaomi´ internationalization process was marked by two main
problems: The patent crisis, and the unsuccessful sales performance aboard. So, in an attempt to
prevent those 2 main issues our internalization strategy relies on a conservative strategy and
internationalize through stages to physically close markets. In our pitch we will identify which markets
Xaomi should enter and the mode of entry.
A very common pitfall of internalization that leads companies to expensive mistakes is to overestimate
the attractiveness of foreign markets focus only on traditional economic numbers (like GDP, Market
size,). Of course, that those indicators are important, but we can´t ignore the other 4 factors that can
change the attractiveness ‘rate of the new markets: cultural distance, administrative and political
distance, geographic distance and economic distance.
Xaomi´s business is based on consumer goods and cultural distance among markets affects consumer´s
preferences deeply. There is a deeply rooted system of unspoken principles that guide individual in their
everydat choices and interactions with consumer goods products.
Xaomi should take advantage of it´s knowledge of Asian market, we know that we can´t assume that all
asian´s countries share the same culture and behaviors, but Xaomi would face a minor cultural distance
challenge compared to western´s countries.
 As a result, the internationalization of Xiaomi in 2015-2016 caused heavy losses. Lei Jun later reflected:
“Globalization cannot be radical.” “Globalization has to be a long-term plan for 10 or 20 years. We
should do each market one by one.”
Indeed, different countries and different markets have different political and economic systems and
related laws and policies. Without a full understanding, evaluation, and judgment of the market, it is very
difficult and unwise to copy the domestic model and enter the new overseas market. After deciding to
enter the international market, it is a necessary step to conduct market research, choose the right market
and enter in the right way.

Insights of ent