Chinese Invasion
Chinese smartphone producer Xiaomi, which has created a sensation in the global smartphone market, is officially entering the Korean market.
According to industry sources on Aug. 27, officials of Xiaomi in China will visit Korea on Sept. 1 to meet officials of G Market.
In the meeting, Xiaomi will discuss a contract to establish its official online distribution channels. Currently, there are no official distribution channels in Korea that sign a contract with the head office of Xiaomi. Some individual or corporate parallel importers sell Xiaomi smartphones or smartbands online and offline.
Xiaomi did not do offline stores when tapping into the Indian and African markets or even mainland China. The company sells its products online only. It has entered overseas markets with local partners who have distribution channels. Accordingly, there is a possibility that Xiaomi will open a domestic online store through G Market.
Xiaomi is expected to release the Mi Band, a fitness tracker, second batteries and home appliances first and launch smartphones later. It is believed that Xiaomi is considering online distribution channels, rather than domestic mobile carriers, as its partners due to the fact that the company can avoid some complex problems, including patents, which are setbacks for sales regardless of the new account opening process for smartphones.
Xiaomi’s entry into the Korean smartphone market will have great ripple effects. As perception is recently spreading that Chinese smartphones give high performance for their prices, an increasing number of Korean consumers are purchasing them. In particular, Xiaomi’s new product with a large display is priced only at 150,000 to 180,000 won (US$127 to 153). In the domestic market, more and more consumers are buying low-end smartphones, rather than expensive high-end smartphones, after the enforcement of the Mobile Device Distribution Improvement Act last year. Accordingly, the domestic market invasion of Xiaomi will greatly affect on domestic sales of Korean smartphone producers, including Samsung and LG Electronics.