Jakarta, CNBC Indonesia – Xiaomi refuses to sell its cellphone products in the United States (US). The decision was made even though the company is the world’s third largest mobile phone manufacturer.
So far, Xiaomi has sold its cellphones in more than 50 countries. Including its two main markets namely China and India.
Xiaomi products are not impossible to find in the US. However, in that country, the products encountered are not smartphones, namely LED lights, streaming devices, projectors, and power banks.
Android Central notes Xiaomi’s decision not to bring its phones to Uncle Sam’s country because of the company’s business model. The company’s HP products are known to be much cheaper than Samsung or Huawei smartphones, and there is a reason behind it all.
It turns out that the company only makes a profit of 5% of the selling price of its production. That way Xiaomi can ensure its products provide the greatest value for its buyers.
Unfortunately, a similar way can not be applied in the US. Because there, the business depends on cooperation with telecommunications operators.
So US consumers will buy HP by paying long-term contracts with telecom operators. A different way from other countries that buy only their cell phone products.
Xiaomi reasoned that partnerships with telecom operators required large investments and sales costs would skyrocket. This will make it difficult for the company’s business, which so far has only taken 5% of profits from cell phones that have been sold.
Meanwhile, the heated relationship between the US and China is also a possible reason for Xiaomi’s reluctance to expand its business to the US. Companies are considered risk averse because of this condition, including previously another Chinese brand Huawei which had to face difficulties after being sanctioned by the local government.
“After what happened with Huawei, I don’t think Chinese brands want to take the risk of investing heavily in a market that can easily ‘block’ them,” said IDC Research Director Nabila Popal.
