"Chinese consumers are price sensitive — they will not purchase a product priced higher than their perceived value as they believe that there will be companies offering similar products at a cheaper price elsewhere or in time to come [especially with the rise of e-commerce]. With this understanding, we decided to offer high quality smartphones at a more affordable price for the Chinese consumers," said Wong.
"We were able to do so because we operated like an Internet company, in which our sales and marketing rely purely on the Internet. Our marketing/advertising efforts are mostly done via social media such as Facebook, Weibo and WeChat, and this enabled us to reduce our overall operating costs by 35 percent. Retail and channel overhead usually account for more than 40 percent of the overall costs for smartphone makers/sellers. By selling our products online and directly to consumers, we're able to save on that overhead as we don't need to spend [so much] on carrying costs and physical retail space. These cost savings are passed on to our customers, enabling us to offer affordable high quality products to everyone," he explained.
Wong added that there was another reason the company decided to offer high quality products at an affordable price. "Our ultimate aim is not to sell hardware but to be a [full-fledged] Internet company such as Baidu, Alibaba, and Google, which offers Internet-based software and services. To achieve this, we are using our hardware to grow the pool of daily active users who uses our platform. Once we have enough users on our platform, we can then offer services such as e-commerce and advertisement-free premium services, just like what other Internet companies are doing."
To further expand its user base, Xiaomi has stepped out of China and expanded its footprint to Singapore, Malaysia, Philippines, India, Indonesia, Thailand, Vietnam, Russia, Turkey, Brazil and Mexico. The company has also developed a wider range of consumer electronics including the MiPad tablet, Mi (smart) TV, Xiaomi Smart home Kit, Mi (activity tracker) Band, and the Yi Action Camera.
Wong was one of the keynote speakers at the recent Hong Kong International Computer Conference (HKICC), an annual flagship event organised by the Hong Kong Computer Society (HKCS). In line with the theme of the conference, Wong shared his thoughts on the digital economy and how business should leverage it during his presentation.
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