China is pouring cold water on Xiaomi's growth. A drop in sales for the past six months compared to the second half of last year comes as a nasty shock from a smartphone maker valued at $45 billion just months ago. Xiaomi is grappling with a slowing market and competitors catching up back home. China's tech prodigy will have to look elsewhere for opportunities.
The five-year old Chinese handset maker toppled Samsung to become China's number one smartphone seller in 2014. Sales for Xiaomi that year jumped 187 per cent year on year, while the South Korean heavyweight experienced a humiliating 22 per cent decline in the same period, according to data tracker IDC.
The scrappy underdog in December raised $1.1 billion at an implied valuation that made it one of the world's most valuable private tech companies, alongside the likes of car-hailing app Uber and rental listings site Airbnb, at $45 billion.
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This bodes ill for Xiaomi: some 90 per cent of sales are in China, according to Canalys.
A shrinking core market is not Xiaomi's only worry. Local competitors such as Lenovo, which bought Motorola in January this year, and Huawei are closing in. Samsung has recently launched a mid-priced phone with premium features, competing head to head with Xiaomi's handsets.
Growth, then, will have to come from abroad. India is expected to become the world's largest smartphone market by 2017 after China. This year's tie-up with an Indian retail chain as well as an investment from local tycoon Ratan Tata shows Xiaomi has India in its sights. The answer to how China's most valuable start-up can keep its shine will be found outside, if it is to be found anywhere.
