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Tag: China

  • Alibaba innovation will transform Shanghai Bailian

    Alibaba innovation will transform Shanghai Bailian

    Alibaba Group’s collaboration with Shanghai Bailian Group, one of China’s biggest general store and retail chains, is driven by Jack Ma’s push to use innovation to shake up outdated retail.

    “Alibaba wants to help update some of Bailian’s 4700 stores the nation over, coordinating everything from client relations to installment and coordinations in a way like its tie-ups with different players, for example, gadgets chain Suning Commerce Group,” says Oliver Johnson, director of corporate equities with Woori Bridgewater Brokerage.

    The online big-hitter that vanquished eBay and Amazon in China has set its sights on using its arsenal of information and innovation to change the $4 trillion universe of household physical retail. In its greatest old-economy bargain, Alibaba is driving an offer to purchase retail chain Intime Retail Group for as much as $2.6 billion.

    “Their billionaire fellow founder needs to assemble a system that will permit stores and brands to screen exchanges as they happen, freeing layers of merchants so that retail outlets can put orders online progressively,” says Johnson.

    Daniel Zhang, Alibaba’s CEO, described the association with Bailian as “a critical breakthrough in the advancement of Chinese retail”, where the qualification amongst physical and virtual business is getting to be distinctly out of date.

    Amazon.com is likewise quick to show how innovation can change the deeply rooted shopping background. It launched Amazon Go in December, permitting Seattle customers to get staple goods without being held up in checkout lines as their purchases are electronically charged when they exit the store.

    “Like Alibaba, the U.S. web based business titan has broad experience working with reams of important client and inventory network information and shopping designs,” observes Johnson.

    “With Bailian, Alibaba will tap a system of 4700 stores crosswise over 25 Chinese regions. Aside from Intime, the Hangzhou, China-based organisation has as of now put resources into retail administrators including Suning and Sanjiang Shopping Club to further its alleged new retail analysis,” added David Fraser, head of corporate trading at Woori Bridgewater Brokerage.

    Alibaba won’t take a stake in Bailian.  In any case, the match will coordinate their participation databases and use facial acknowledgment innovation to enhance customers’ encounters, Alibaba said. Alibaba’s online installments framework, Alipay, will be accessible at all Bailian stores. The web-based business mammoth’s conveyance member – Cainiao Smart Logistics Network – will work with Bailian to substance out conventions that make the framework more effective.

    Woori Bridgewater Brokerage is an advisory investment company.

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  • Samsonite Asia heightens focus on China

    Samsonite Asia heightens focus on China

    Branded luggage-maker Samsonite Asia aims to make China its biggest market within five years, pinning its hopes on eCommerce and social media to fuel growth.

    While sales in China now account for more than 10 per cent of its total revenue, Samsonite CEO Ramesh Tainwala says they are likely to double by 2022, thanks to the explosion in online shopping and a wealthier population keen to travel.

    “Now that 20 per cent of our Chinese businesses come from online, we expect the number to grow by about a third in a couple of years,” he says.

    Global net sales in 2015 reached US$2.43 billion for the Indian company.

    Virtual stores on B2C sites JD and Tmall have claimed 60 per cent of Samsonite’s online business in China. Its luggage is also sold through the digital outlets of shopping malls and department stores.

    Samsonite will open its own direct online shopping portal this year aimed at more sophisticated buyers who want bigger-ticket items via the brand rather than a third party.

    First-half sales last year remained flat for Samsonite, according to its interim report, partly because of sluggish performance in China as consumers forsake department stores for online retail.

    Samsonite president for China and the Philippines Frank Ma says the company spares no effort in using social media campaigns to guide traffic to brick-and-mortar stores. For example, followers of Samsonite’s official WeChat account are given a discount coupon when they sign up for promotional events in shopping centres.

    Ma says content marketing helps attracts customers and adds to another 5 per cent to its offline sales.

    Seven of Samsonite’s nine brands have been introduced to China, ranging from the entry-level American Tourister to the newly acquired Tumi, which targets high-end business travellers.

  • DHL, Huawei enter ambitious automation partnership

    DHL, Huawei enter ambitious automation partnership

    Deutsche Post DHL Group and Chinese technology conglomerate Huawei Technologies are collaborating on a range of supply chain services for customers using “industrial-grade internet-of-things hardware and infrastructure.”

    The internet of things (IoT) refers to physical devices, such as vehicles, buildings and other items, that are embedded with electronics, software, sensors, actuators and network connectivity that can communicate with each other. That shared information is then utilized to automate and streamline processes. For example, sensors in refrigerators can read bar codes of products and make sure the milk is fresh and the beer is adequately stocked.

    Deutsche Post DHL estimates that the IoT could generate up to US$1.9 trillion in additional value for the global logistics industry by 2025. The logistics company sees the new technology as a way for operators to “better monitor and optimize their supply chain processes with low-cost networked sensors and devices.”

    Under the MOU, Huawei and Deutsche Post DHL Group will collaborate on developing cellular-based IoT technology. The projects will tackle ways to connect numerous devices across long distances with minimal power consumption. Connected devices will share data and to increase visibility in warehousing operations, freight transportation, and last-mile delivery.

    The agreement assigns Huawei’s connectivity experts and network infrastructure accessible to Deutsche Post DHL Group’s automation projects in warehousing, freight and last-mile delivery services.

    “Spending on connected logistics solutions is expected to more than double between now and 2020, and many logistics providers, including Deutsche Post DHL Group, have already begun to explore internet of things applications in their supply chains, including everything from enhanced asset tracking to driverless delivery vehicles,” said Markus Voss, COO and CIO of DHL Supply Chain.

    DHL has already opened its €90 million Advanced Regional Center in Singapore in 2016, featuring almost-entirely automated picking and storing infrastructure that the company says is 20 percent more efficiently than its human equivalent.

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  • Victoria’s Secret opens first flagship store in China

    Victoria’s Secret opens first flagship store in China

    US brand Victoria’s Secret has opened its first flagship store in China as it taps into the growing appetites of mainland women for high-end lingerie.

    Fronted by an iconic pink glass facade, the four-storey, 2,500 square meter Victoria’s Secret store opened its doors on Thursday in Huaihai Road, one of Shanghai’s most upscale shopping streets.

    The new shop, which is the first to sell the brand’s full range of products attracted thousands of visitors on the opening day. Previously, Victoria’s Secret had only operated concept stores in China, selling accessories.

    “Chinese women are now ready for more sophisticated bras,” said Pascal Martin, a partner with OC&C Strategy Consultants.

    As Chinese women have increasingly adopted western fashion trends and brands, many locally-owned bra offerings at the cheaper end of the spectrum and paying little heed to design and brand appeal have popped up.

    The US lingerie giant, which entered China in 2015, has unveiled an aggressive expansion plan in the fast-growing Chinese market.

    Besides launching another flagship store in Chengdu in southwest Sichuan Province soon, Victoria’s Secret will move its high-profile annual fashion show to Shanghai at the end of this year.

    The retailer will charge mainland customers between 300 and 600 yuan (US$44 -87) for a bra, a little higher than in the US.

    Joey Chio, senior associate director of Savills Shanghai Retail, which helped Victoria’s Secret select the location for its new store, said the opening of the flagship shop would satisfy Chinese women’s “desire to keep up with the forefront of international fashion”.

    Luxury lingerie and high quality functional products are becoming increasingly popular among Chinese women, and a more frequent topic of discussion on social media.

    The female underwear market in China is expected to have a retail value of US$25 billion by 2017 – double that of the United States – and will grow to US$33 billion by 2020, according to Euromonitor.

    Top Italian luxury lingerie maker La Perla, which has eight stores in China, said it planned additional outlets in Chengdu and Chongqing and aims to open a men’s store in Beijing.

    Canadian yoga brand Lululemon entered the Chinese market by opening its first shop in Shanghai last December.

    The penetration rate of the bra sector in China is still under 10 per cent, compared with around 40 per cent in the US and 20 per cent in Japan, Martin said. Most of the bra brands currently in China are still focusing on the traditional department store channel rather than malls, indicating opportunities for brands like Victoria’s Secret, he added.

  • Walmart China eyes up to 40 new stores

    Walmart China eyes up to 40 new stores

    Walmart Stores says it plans opening between 30 and 40 new stores in China this year.

    Included in that number will be up to five new Sam’s Club outlets.

    While Walmart achieved a solid performance in its home market last year, its international operations – especially in the UK, are struggling.

    In China, Walmart is seeking to develop new retail models to cater to consumers’ changing shopping habits.

    Walmart China will invest a further RMB300 million (US$43.4 million) in upgrading and refurbishing about 50 of its existing stores and improving its supply chain operation.

    “We will move faster to improve the overall customer experience and continue our strategic alliance with JD.com and to strengthen omni-channel approach,” said Dirk Van den Berghe, president and CEO of Walmart Asia and China.

    Last year, Walmart China opened 24 new stores: 21 hypermarkets and 3 Sam’s Club stores.

    The company said its average basket size in China increased by 5.4 per cent in the quarter ended January and same-store sales rose 2.3 per cent.

  • Esprit Holdings moves out of the red

    Esprit Holdings moves out of the red

    Fashion group Esprit Holdings says it has made a “significant recovery”, turning around its HK$238 million (US$30.6 million) loss to record a net profit of HK$61 million for its first half.

    While the improvement was driven by retail sales, the group says two other major developments were a vital element of the growth in overall profitability for the half-year, to December 31:

    • The ongoing downsizing of the scale of the business, including the closure of unprofitable stores and low-performing wholesale locations.
    • Management moves increased the group’s gross profit margin, including fewer promotional activities, price markdowns and discounts for wholesale partners.

    As a result, the first-half unaudited figures show a 9.9 per cent drop in revenue to $8.323 billion. However, the measures produced the intended improvement in profitability, with gross profit margin increasing by 2 per cent .

    During the period, the group closed 9412 sqm of retail space, with coupled with the closure of 25,806 sqm in the previous six months represented a 11.1 per cent year-on-year reduction.

    Asia Pacific retail, excluding online sales, at HK$951 million, fell by 21.5 per cent. Retail space was reduced by 18.5 per cent.

    “It is important to note that in APAC we had the most drastic reduction of promotional activities and price markdowns,” says the company.

    Esprit’s Eshop brought in 24 per cent of total group revenue, generating HK$1.993 billion, down by 2.4 per cent. However, there was a 58.7 per cent leap in revenue for Eshop APAC to HK$119 million.

    China represented more than 80 per cent of the Eshop sales in the region. It recorded revenue growth of 54.9 per cent, fuelled by the integration of the Esprit Friends loyalty program, the strengthening of activities with Tmall, the expansion of its online presence through platforms such as WeChat and Weibo, and collaborations with celebrities and opinion leaders to enhance brand equity through social media.

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  • McDonald’s China does nothing, but under attack anyway

    McDonald’s China does nothing, but under attack anyway

    McDonald’s China is drawing criticism from Hong Kong trade unions, who fear the impact of the new owners on employment conditions.

    Despite reassurances from local McDonald’s management – or any evidence at all suggesting changes to labour policies are looming – the fast food giant has come under attack on both sides of the border.

    The new business unit taking over the McDonald’s business in China and Hong Kong is jointly owned by state investment group Citic Ltd and US private equity company Carlyle Group. McDonald’s Corporation (US) will maintain a cornerstone minority stake. The new company holds 20-year franchise rights.

    In a statement issued this week, the Hong Kong Confederation of Trade Unions (HKCTU) said the change of ownership will put further pressure on pay rates at Hong Kong outlets, where it says many workers earn little more than the minimum wage of HK$32.50 (US$4) per hour.

    “In other countries where McDonald’s has sold a large stake of its business, the resulting model has placed enormous pressure on franchisees, which has made it harder for franchise operators to provide adequate pay and conditions for their workers,” HKCTU official Wong Yu Loy said.

    “If the buyers in Hong Kong get squeezed by McDonald’s as they have in other countries, workers here may get even less as a result,” Wong said.

    Last week, a Chinese labour consultancy Hejun Vanguard Group filed a formal complaint with the mainland’s Ministry of Commerce claiming the move to the new business model may adversely impact its 120,000 workers in China – and McDonald’s customers.

    But McDonald’s has rushed to placate concerns saying its franchise models all over the world are based on “mutually beneficial partnerships” and the company “treasures” its employees.

    “The level of remuneration of our employees is based on their positions, working experience, expertise, performance, as well as market conditions,” said a spokeswoman.

    “McDonald’s strictly abides by Hong Kong labor legislation and the statutory requirements. The current compensation and benefits of McDonald’s Hong Kong will not be affected as a result of bringing in strategic partners.”

    The HKCTU, which represents 90 affiliate labour organisations covering 170,000 workers, appears unmoved.

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  • Benoy updates Sanya Eyot project designs

    Benoy updates Sanya Eyot project designs

    Designs have been updated by international architectural/design company Benoy for the retail-centred China International Travel Service (CITS) Sanya Eyot scheme on Hainan Island.

    It is the second phase of the wider CITS scheme in the new resort area of Haitang Bay in Sanya. The development is on the reclaimed Hexin Island, surrounded by luxury international hotels and natural attractions. A pedestrian bridge connects the two phases of the scheme.

    “Our vision is to bring a completely new experience and break the mould for retail-led tourism developments in Haitang Bay,” says Benoy director Ferdinand Cheung.

    As a point of difference, the 32,000 sqm mixed-use, retail-led destination introduces a porous and multi-layered environment. The design clusters together distinctive, small-scale buildings to create a series of indoor and outdoor spaces. These will host entertainment and retail activities.

    Elevated walkways and bridges spanning the length of the pedestrian precinct will connect the buildings.

    Canopy structures inspired by seashells firmly root the design into its seaside context. They have been designed in accordance with solar paths and prevailing winds to encourage natural ventilation and open up sightlines across the island.

    “The canopy designs have not only allowed us to fulfil the brief for the project environmentally, helping to encourage air circulation and provide sun shading within this known humid and hot climate, but they also bring a real identity to the scheme. Their form and colour connect back to the coastal and resort quality of the site,” says Benoy senior associate director Janet Chan.

    Anchoring the development at the north end is a covered market area which will sell produce from fish farms and provide stall areas for imported goods.

    An aquarium with a reflective pool will bookend the market space, providing the backdrop for the al fresco and market-style dining area.

    With the reclamation of Hexin Island complete, construction work on the CITS Sanya Eyot scheme will start this year. The development is targeting a China three-star sustainability rating.

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  • Some bright future for Bossini International

    Some bright future for Bossini International

    Overall revenue fell 11 per cent for apparel retailer Bossini International during the first half of its financial year.

    However, its interim results to December 31, showed an improvement in gross margin – by four points to 51 per cent, attributed to more effective sales and marketing strategies. Profit for the period attributable to the owners increased by 20 per cent.

    The Hong Kong and Macau market, the Mainland China market and the Taiwan market showed signs of having bottomed out, says the company, with same-store gross profit level after a period of negative growth for more than a year.

    With a footprint across 28 countries, the group says it is still optimistic in the long run, adding 16 shops during the half-year.

    Its revenue for the six months was HK$1.022 billion (US$131.6 million), down 11 per cent from HK$1.146 billion in the same period a year earlier. Gross profit slipped 4 per cent to HK$519
    million.

    For directly managed stores, same-store sales in Hong Kong and Macau fell 6 per cent, a slight improvement, and Mainland China and Taiwan stores performed similarly, declining by 2 per cent. Same-store sales in Singapore dropped by 8 per cent compared to per cent in the previous first half. The group’s overall same-store sales slipped 6 per cent.

    At December 31, the Group had 952 stores, up five from six months earlier. Directly managed stores grew to 287 from 280, while franchised stores dropped by two to 665.

    The group continued its strategy of working with licensing partners to strengthen brand recognition and boost sales. Three licensing programs were launched in the first half of the financial year, working with Disney and Universal Studios.

  • Hudson Travel bookstores launch at Chengdu Airport

    Hudson Travel bookstores launch at Chengdu Airport

    Swiss travel retailer Dufry has launched the Hudson Travel Essentials Convenience Bookstore brand with eight outlets at Chengdu Shuangliu International Airport.

    The Hudson Travel bookstores are being run by Hudson Bright Power Beijing, a JV between Dufry and bookstore company Bright Power Beijing.

    Chengdu Shuangliu International Airport handled more than 44 million passengers last year, and is ranked as the fourth-busiest airport in China behind Beijing Capital International, Shanghai Pudong and Guangzhou Baiyun International airports.

    The new Hudson Travel Essentials Convenience Bookstores offer travellers “one-stop shopping with an international ambiance”, says Dufry. As well as magazines and books, the shops offer international snacks and soft drinks, Chinese cultural and destination souvenir items, travel convenience products, and digital and electronics accessories.
    Dufry plans to roll out the Hudson brand across China and expand the retail concept globally.
    China is poised for significant growth in passenger numbers both at airports and railway stations, says the company.

    The Civil Aviation Administration of China says there were about 500 million air passengers in China last year, 13 per cent more than in the previous year.

    “With its remarkable number of passengers, Chengdu is the ideal starting point to further grow in China, which is a very attractive market for us,” says Dufry Asia/Middle East/Australia division CEO Andrea Belardini.

    “Besides the Hudson convenience stores, we are also able to offer our landlords a complete range of retail formats and solutions, from typical core categories to multi-brand formats such as sunglasses, fashion watches, electronics and leisurewear.”

    Bright Power was founded in 2005 as a book-publishing company, and has evolved from book wholesaling to magazine and book retailing. It has bookstores in four out of the 10 major Chinese airports and at six of China’s top 10 high-speed railway stations.

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  • Hard Rock Hotel tuning up for China

    Hard Rock Hotel tuning up for China

    Mainland China’s first Hard Rock Hotel will open in Shenzhen this year.

    It will feature a rooftop restaurant and pool, and offer about 1021 sqm of meetings space.

    As a point of difference, the 258-room Hard Rock Hotel Shenzhen will offer complimentary in-room Fender electric guitars. There will also be a kids’ club.

    The hotel is part of the Mission Hills Centreville resort district that opened last year and includes an 18-hole golf course and a retail mall.

    Hard Rock opened a 322-room hotel in Macau in 2009.

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  • Huawei launches GigaHome smart home platform

    Huawei launches GigaHome smart home platform

    Huawei launched its new GigaHome solution at the FTTH Conference 2017 in Marseilles, France last week, to help operators build smart and high-performance home networks for customers.

    The GigaHome platform is designed to support multiple digital home applications to deliver smart home services that are efficient, secure and accessible.

    The E2E solution focuses on home gateways and supports flexible Wi-Fi extension through media including CAT5 lines, power lines and wireless repeaters.

    Huawei said the solution can provide smart home coverage with a Wi-Fi speed rate of up to 300Mbps. Under the solution, home gateways adopt dual cores and enable gigabit Wi-Fi access by using technologies including Wi-Fi hardware forwarding, dual-band, 802.11ac and 4×4 MIMO.

    Ultimately the solution is designed to help operators shift focus from providing traditional home broadband to smart home services capable of generating a higher ARPU.

    Huawei Access Network president Jeff Wang said the vendor plans to continue to focus on helping operators accelerate their digital transformation by supporting them in offering video and smart home services.

    “Focus on customer demand is the driving force for Huawei’s continued development and continuous innovation,” he said.

    “Huawei’s home network solution provides a full Wi-Fi coverage, and a good performance home network infrastructure, operable and manageable cloud-based management platform and open ecological system to enhance the home network experience, operational efficiency and bring new value-added services to operators.”

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  • Tag Heuer on Tmall

    Tag Heuer on Tmall

    Swiss watchmaker Tag Heuer has launched a flagship store on Tmall.

    The opening of Tag Heuer on Tmall takes to five the number of LVMH units to have a presence on the Alibaba-owned site.

    The launch is the latest sign of luxury goods makers, faced with slower sales in the once-hot China market, embracing new sales channels and digital marketing in an attempt to reach the country’s internet savvy younger generation.

    Leo Poon, Tag Heuer’s GM for Greater China, called the move “a right decision, since Tmall is the largest B2C platform in China and can help us to reach our target customers.” More than 75 per cent of Alibaba users are 35 years old or younger. The company’s China retail marketplaces had a total of 443 million annual active buyers as of December 31.

    China’s share of the global luxury goods market declined slightly from 31 per cent to 30 per cent in 2016, according to a recent report released by consulting firm Bain. But the country remains an engine of growth for luxury goods as China’s middle class continues to increase in size and purchasing power. Tighter government controls on “grey market” imports are bolstering domestic consumption through legitimate sales channels; meanwhile, online shopping in China grew a brisk 26 per cent last year, according to China’s National Bureau of Statistics.

    Against this backdrop, luxury good makers are targeting a younger demographic through digital sales and marketing strategies.

    “If you want to win the future, you should establish a relationship with the young generation early,” said Liu Xiuyun, general manager of Tmall’s apparel division. “Confronted with the internet and e-commerce, conservative luxury brands will lose the future in China.”

    Tmall is not only a sales channel, Liu added. Because it is part of Alibaba’s online ecosystem, which includes mobile apps, social media and entertainment portals, merchants can engage consumers where they live online. Alibaba also has a wealth of data allowing merchants to more precisely target and cultivate individual customers as well as predict general consumption trends, “and this is exactly what luxury brands are looking for,” Liu said.

    In addition to Tag Heuer, other LVMH flagship stores on Tmall are cosmetics brands Make Up For Ever and Guerlain, beauty brands retailer Sephora and premium luggage brand Rimowa.

    LVMH’s venerable Louis Vuitton label has also partnered with Alibaba. Last year, Louis Vuitton invited members of Alibaba’s exclusive Apass Club – online shoppers who spend an average of $45,000 a year in Alibaba marketplaces – to visit the company’s headquarters in France. In addition, Louis Vuitton became one of the first international brands to join Alibaba’s recently launched Big Data Anti-Counterfeiting Alliance, an organisation set up to share industry and technical know-how in order to combat the online sale of counterfeit goods.

    At a February 13 ceremony marking the opening of their Tmall store, Tag Heuer unveiled a pair of his-and-her watches, priced at $,852 for both, as a special Valentine’s Day promotion in China. The launch ceremony, broadcast via Tmall’s mobile app, featured a livestream of Chinese actress Song Jia.

    -Susan Wang

  • China Duty Free Group confirms Kunming arrivals award

    China Duty Free Group confirms Kunming arrivals award

    China Duty Free Group (CDFG) has confirmed to DFNIonline it has been awarded the 489sq m Kunming airport arrivals duty-free contract. The airport handled 37.7 million passengers in 2015, an increase of  16.8% on 2014.

    The award follows China National Service Corporation for Personnel Working Abroad’s (CNSC) recent capture of the five-year Chongqing airport arrivals contract spanning 572 sq m.

    Speaking in the Cannes issue of DFNI last year, CDFG chairman Peng Hui said: “In recent years, the Chinese have undoubtedly been the main force for luxury spend. Maintaining high-end consumption at home is a key part of the government’s strategy. The opportunities in inbound shops are in response to this national strategy.”

    News of the government’s plan to open arrivals duty-free shops in Chinese airports and seaports to boost the domestic economy was first revealed in 2015. The motive was to encourage domestic consumption and deter Chinese consumers was purchasing duty-free products overseas. Duty-free arrivals shops are already operational at Beijing Capital and Shanghai Pudong and Hongqiao International airports. But in February 2016 the government announced it will be extended to 13 other airports and six border port locations as previous reported.

    The full list of those Chinese airports comprise: Guangzhou Baiyun, Hangzhou Xiaoshan, Changdu Shuangliu, Nanjing Lukou, Shenzhen Bao’an, Kunming Changshui, Chongqing Jiangbei, Tianjin Binhai, Dalian Zhoushuizi, Shenyang Taoxian, Xi’an Xianyang, Urumqi Diwopu and Qingdao Liuting International airports. Four border ports are located in Shenzhen (Futian, Huanggang, Shatoujiao and Wenjindu) with the others located in Zhalou (Zhuhai) and Heihe (Heilongjiang).

    The situation further developed last November with the announcement CDFG, CNSC, Shenzhen Duty Free and Zhuhai Duty Free had been named as qualified bidders for the licenses.

    All contract awards are expected to be awarded by March or April, according to CNSC deputy general manager Duty Free Department Jacky Yan, who told DFNIonline during a visit to Beijing last year: “All winners should be revealed by March or April after the airports have registered results through the Ministry of Finance.”

  • What exactly is wrong with China’s ‘Apple’ Xiaomi?

    What exactly is wrong with China’s ‘Apple’ Xiaomi?

    Although it crossed $1 billion in revenue in 2016 within the first two years of its operations in India, Xiaomi — once touted as the “Apple” of China — has slipped to fourth spot back home as the demand for its smartphones declined 22 per cent annually — eventually taking it to seventh spot in the global smartphone ranking with a 16 per cent drop in sales.

    The decline came even as Hugo Barra, Xiaomi’s high-profile head of international operations, left the company in January and joined Facebook to lead its virtual reality (VR) project.

    According to the experts, the key reason for this decline is Xiaomi’s rivals racing ahead with key features, better innovations, bigger marketing budgets and wider online and offline distribution channels.

    “Until 2016, Xiaomi relied only on online channels for smartphone sales which contributes approximately 30 per cent of the total smartphones sales in China, leaving a huge chunk of the market untapped. Its competitors invested heavily in building strong offline channels, expanding their reach to tier-2 and tier-3 cities and moving ahead of Xiaomi,” Shobhit Srivastava, Research Analyst, Mobile Devices and Ecosystems at market research firm Counterpoint Research, told IANS.

    Another reason for Xiaomi’s slipping growth is the rising average selling price (ASP) of the maturing China smartphone market, experts noted.

    “Bulk of the sales in China is coming from upgrades where Huawei, OPPO and Vivo are gaining market share while Xiaomi remains in the below-$150 category. Xiaomi also lacks in research and development unlike its Chinese counterparts which are vertically integrated,” Srivastava added.

    An email sent to the company for its reaction to the decline in global smartphone sales didn’t elicit any response.

    Xiaomi’s main markets have been China and India which combined get more than 95 per cent shipment share. While performance in India improved in 2016, the company lost market share in China resulting in the decline of overall global smartphone ranking.

    Huawei, Oppo and Vivo have emerged as clear winners with Oppo and Vivo registering significant growth in China.

    Shipping 44.9 million iPhones to China, even Apple has beaten Xiaomi that shipped 41.5 million smartphones in 2016, market research firm International Data Corporation (IDC) revealed earlier this month.

    According to IDC’s “Quarterly Mobile Phone Tracker” report, Apple dropped from 58.4 million iPhones in 2015 and Xiaomi from 64 million Mi phones — drops of 23 per cent and 36 per cent, respectively.

    Amid the global gloom, it is the Indian smartphone market that has helped Xiaomi gain profits.

    “They (Xiaomi) have already established their presence in India with a revenue of more than $1 billion in 2016 in the country. They will keep going as they have a strong management team,” Jaideep Mehta, Managing Director, IDC South Asia, told IANS.

    “On Barra, I would say that a senior executive has just moved on. Of Course, he will be missed, but the company is bigger than one individual,” he added.

    Coincidently, Xiaomi is not going to showcase any product at the upcoming Mobile World Congress (MWC), the telecom industry’s largest event, in Barcelona, Spain, later this month. There are reports that Xiaomi doesn’t have new devices to showcase during the MWC show.

    This indicates there is something wrong somewhere and the company needs to plug the problem fast before its global presence plunges further.

    “To recover and sustain growth, Xiaomi will have to focus on building strong offline channels as it will open up a significant market for the company. It needs to concentrate more on its R&D and come up with a device in the higher-mid end segment for the increasing Chinese middle-class population with higher disposable incomes,” Srivastava emphasised.

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