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Editorial: For Xiaomi, It’s The Chicken Or The Egg In The PH

Xiaomi has hard lessons to face

When Xiaomi first entered the PH market last year, their arrival was hailed as beginning of the end for many local and international brands. And why shouldn’t it? Their Mi 3 at the time had an excellent price to spec ratio, coming in at more than half of the price of competing phones at the time. Right after that, the company released the Redmi 1S, further providing great value to the sub 7K price segment. Xiaomi also released their Mi Pistons and series of power banks to the PH market, and it seemed that Xiaomi was well on their way to becoming a dominant market player.

Redmi Note
Redmi Note

But then, somehow, things slowly unraveled. Expected releases of products like the Redmi Note, both the first generation and the 4G version were not released in the PH, even though they saw its release in neighboring ASEAN countries. Releases of highly anticipated products like the Mi 4, Mi Band, and Xiaomi’s other accessories never pushed through, and products like the Mi Pad were delayed.

As a result, many fans of Xiaomi were disappointed at the slow (and sparse) releases, and negative sentiment started to build. Before the release of their newer products like the Mi 4i, Mi Pad and the Redmi 2, there was a time that only four products lines were available to buy in Lazada, products that were all released last year. Many (unfairly) accused Xiaomi of selling old stock in the PH.

That's 8,000 phones, sold in less than 4 minutes
That’s 8,000 phones, sold in less than 4 minutes

While Xiaomi never explained why the PH always gets the tail-end of their releases, it’s not hard to see why. To put it simply, Xiaomi’s online only selling model has never worked in the Philippines. The local market is simply too set in their offline buying ways. We’ve confirmed with other brands that even when their products are offered in Lazada at a cheaper price compared to physical stores, people still are willing to pay extra to buy it offline. In other markets, Xiaomi have always posted how fast their sellout times are, and how many pieces they’ve sold during that time period after a successful flash sale – that’s not the case in the PH, which already tells you a lot.

Compared to the 8 minute sell out time of Mi power banks, number undeclared
Compared to the 8 minute sell out time of Mi power banks, number undeclared

And that’s part of the problem – the Philippines isn’t a hot market for Xiaomi. Their products aren’t flying off the (virtual) shelves at Lazada. Stocks are sitting in warehouses, incurring storage costs wherein other countries it’s gone in less than five minutes. It’s not surprising then that Xiaomi is prioritizing other countries – the company has always stated that they operate with a razor-thin margin, and if we were in their shoes, we’d prioritize sending stock to countries where those products would sell out as soon as they’re posted for sale, not somewhere where they’ll sit for a while before being sold.

Xiaomi Mi HiFi Headphones 10
People who want Xiaomi’s Mi HiFi Headphones will find ways to buy it

But that’s also a problem because people who want Xiaomi’s newer products aren’t going to settle for last year’s models. For Xiaomi enthusiasts, Xiaomi’s official Lazada store is no longer the destination to get products. Many have turned to the gray market imports to get their fix. It’s a big problem for Xiaomi Philippines, one that will be an issue moving forward as the company solidifies its offline retail efforts. We’ve always said time and time and again – if someone wants a phone or an accessory, they’ll find ways to get it, officially or unofficially.

Adding physical service centers and retail stores helps a lot
Adding physical service centers and retail stores helps a lot

So what’s Xiaomi to do? It’s a dilemma, obviously – a real chicken or egg situation. To justify the speedier release of products, sales of Xiaomi’s devices need to pick up but to do that, Xiaomi has to release more devices to win back customers. To be fair to Xiaomi, they’ve correctly identified one problem – the lack of an offline retail presence – and have taken steps to resolve that. Folks from Mi Philippines have assured us that they’ve gone to great lengths to cover the entire PH with their retail network, a feat that’s not easy, considering that offline isn’t their primary selling channel. Keeping the prices of devices the same in both offline and online retail channels is also a great move from Xiaomi, one that will keep their competitive edge against other brands. That’s not enough, and Xiaomi will need to start upping the ante when it comes to product releases and at least try to get parity with other ASEAN neighbors like Malaysia and Indonesia.

Will Xiaomi ever regain the momentum that they had when they first entered the PH market? We hope so, but to do that, the company needs to regain its lost fans first.

John Nieves

John is a veteran technology and gadget journalist with more than 10 years of experience both in print and online. When not writing about technology, he frequently gets lost in the boonies playing soldier.

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22 Comments

  1. Offline purchases are not yet going to go away because
    * low levels net access among filipinos
    * low credit card penetration
    * the wish to first hold and try out the product
    * fearful of online scams

      1. Item #4 on that list prevails because there’s absolutely no trust in the honesty of online reviews and product descriptions, especially ones on sites like Lazada. This is a big, real problem, because the Philippines isn’t exactly known for its culture of honesty, and this is especially true in advertising.

        Even product descriptions on PH online sites can’t be trusted. At best, they’re sloppy and not double-checked for factuality, and at worst they’re predatory. Take LED TV specs for instance: way too many products are marketed and described as FHD even though the actual physical pixel count is 1360×768. You won’t notice the quality difference in movies (below 50″ anyway), but try to use that as an HD computer screen and enjoy your dithering and unreadable text.

        Detail and absolute accuracy on specifics is of utmost important to tech purchases; if you can’t flesh these out and then be held accountable for them, there’s no way a trust culture can be built. It seems that many PH sellers still expect their potential customers to be idiots that don’t do their own research at all and can be persuaded purely by sales language or brand recognition.

  2. They don’t advertise through traditional media. Newspapers, radio, tv is still the preferred medium by filipinos.

  3. trust is another factor, i think. there are buyers who don’t trust lazada. aside from shipping defective products, refund/replacement is really a painful process. it’s really more convenient checking the product yourself and tinkering with it before you decide to buy.

  4. Don’t understand the bad rap that Lazada gets. I’ve ordered several items from Lazada (mi3, mi PB, water heater, zerolemon battery) and I have been pleased with the prices/discounts, the time it took to deliver (every item was delivered within 4 days) as well as the condition of the products. Being able to pay CoD is also very nice and convenient.

    1. I agree. Lazada has only given me a bad product once, among the many I’ve ordered from them. And even that bad product isn’t that big of a loss and can be said to be my fault for choosing that product anyway. They have a responsive customer service, friendly LEX delivery people, and an abundance of discounts and promos. Even when they failed to give me a product I wanted, they gave a promo code worth 200 without a minimum cost. All in all I rate their service 4/5 and they don’t deserve the bad reputation they get.

      1. are you secretly from lazada? i have a friend who works as a consigner for nike products being sold in lazada. they decided to pull out citing the poor conditions their products are being subjected to in lazada’s warehouses,as well as improper handling, which was evident on the packaging. those were shoes and apparel, i wonder how they would treat electronics.

    2. Ang ayaw ko lang sa LAZADA ay hindi sila nagre-refund sa mga unsatisfactory products, dalawang beses na ako nag attempt ng refund pero binalik lang sa akin yung mga items …SANA man lang ibawas na lang sa full price na binayaran as a re-stocking/ re-packaging fee, be it 2 or 3 percent of the price, I don’t mind, basta may marefund lang ako….Pero sa mga defective items ok naman sila, they once gave me a defective lamp and I got my replacement within a week

    3. good for you. others were not as fortunate. i have an officemate who ordered a branded laptop because it was a lot cheaper than those sold in malls, but it would always die by itself. He returned it, got a replacement after almost 2 weeks, but got another defective unit. a relative of mine ordered 4 usb sticks, but got only 2. he didn’t bother to demand the other 2.

  5. I live in metro manila but Lazada took a week to deliver my items, not once but twice. Swertihan kasi sa Lazada. I think the Lazada team in the PH is not really up to par as compared to Lazada in other countries. This is why I hesitated to buy xiaomi products. They should’ve sold thru physical stores when the hype around their products was still huge. Now, instead of buying the mipad, I’ll just go for the zenpad 8.

  6. there’s finally a physical store in my area that carries them. But too little, too late. The Redmi 2 costs 6K. Add 1K and you get the Flare x.

  7. Ang problema sa Xiaomi, kung kelan tumamlay sila sa mga pinoy geeks, saka naman sila nag jack-up ng price, sabayan mo pa ng mga underwhelming releases tulad ng Mi4i…..I wold probably consider buying a Xiaomi product again pag nagsimula na silang maglagay ng Sd slots sa kanilang top-end devices

  8. Xiaomi Philippines will never be the priority of the mother company. Its ineffectiveness to dispatch and create buzz for the product shows that the local market is indeed not worth sending the latest items being offered by the mother company. Look at the attention they are giving to Mi India, its because they are worth investing on. Here in the Philippines its either you hit high (iphone samsung) or you hit low (cherry myphone). Its hard for xiaomi to position itself in the middle. Products are good, but marketing is not really doing their job well.

  9. one main reason ay kompetensya rin both local & international brands
    kahit kilala na si xiaomi yung ibang pinoy hindi tapos yung iba ay, china madaling masira, pagka mahal namang siomai yan peke ata yan e 😀

    ang ibang pinoy kasi nag babase lang din kung ano yung kilala na nila, kung ano yung nakasanay na at kung ano yung peyborit brand ng idol nilang artista haha!

    ako mi3 user ako may piston v2 at miPB din ako at ang masasabi ko lang ay happee at satisfied ako. kanya kanya lang din sigurong opinyon yan

    ano naman kung hindi sila ganun bumenta sa ibang tao or gang ngayon di kilala or wala paring tiwala yung iba sa kanila. you cant pleased everyone sa kanila na yung NUMBER1 MOST TRUSTED BRAND in THE WHOLE WIDE MULTIVERSE

    wala kaming paki alaman kung gusto nyo gumawa din kayo ng bidyo. wala makakapigil samin

  10. I believe it’ll be very tough for Xiaomi to regain traction in 2015 because they’ve laid back on what their primary asset is, Online Shopping.

    With no “thrill factor” they’re becoming the same as the everyone, with retail stores etc.

    I just hope they’re second try with the Mi4i will be a wise one. Though I’m in doubt.

    But I’m betting that the Mi Band should be the answer to all of Xiaomi’s problems

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