The handset vendor’s recent patent deal will turbocharge its 5G push but Finnish telcos are pausing and others could follow
Xiaomi has appointed QX Wang as its new general manager of Xiaomi Western Europe, succeeding Ou Wen. Wang, who has been working with Xiaomi since 2017, will lead operations and report to International Business Division VP Alex Xiang and oversee Xiaomi’s operations in Western Europe – driving the brand’s continued expansion in the region. His previous role was GM of global product and technology.
“We are thrilled to welcome QX Wang as the new general manager for Western Europe. His extensive experience in the tech industry made him the perfect candidate to lead our regional team,” said Xiang. “We are confident that under his leadership, Xiaomi will continue to thrive and provide our customers with innovative, high-quality products and services.”
“I am honoured and excited to take on this role and lead Xiaomi’s efforts in Western Europe. Together with our talented team, we’ll continue to bring innovation to the region, empowering everyone to enjoy a smarter and more connected future,” added Wang (pictured left).
A rising competitor which will take market share
The appointment comes at a pivotal time for the high-end smartphone manufacturer which has managed to dodge much of the fallout Huawei has received in Europe. The two Chinese vendors have in the past been big rivals but earlier this month the two buried the hatchet and signed a global patent cross-license agreement encompassing a range of communication technologies, notably 5G.
Industry experts interpret this Huawei-Xiaomi détente as a shift from individual rivalry to collective cooperation among Chinese smartphone brands – the new geopolitical reality according to Jing Daily.
For Xiaomi, despite its global presence, the vendor is dwarfed on the patent front by Qualcomm and Nokia. Up steps Huawei with reportedly more than 120,000 authorised patents globally and a thriving patent licensing business.
Up until this point the two had been embroiled in a heated legal tussle over patent infringements. Huawei had initially taken legal action against Xiaomi, alleging violations of its patents in areas like 4G/LTE technology and mobile photography. Xiaomi retaliated by challenging the validity of several Huawei patents.
Huawei’s new boost for Xiaomi comes at a time when Apple is attempting to once more defy gravity by lifting its new iPhone15 prices to its highest ever despite the cost-of-living crisis. The deal also helps Huawei’s handset R&D efforts.
Europe and Middle East will be pivotal markets
Amid continuing soft demand in the global smartphone market, Xiaomi has outperformed some competitors. According to Canalys, Xiaomi’s global smartphone market share increased by 1.6 percentage points to 12.9% QoQ, with its global smartphone shipments amounted to 32.9m units.
In Q2 2023, its smartphone revenue reached RMB36.6 billion, up 4.6% QoQ. The gross profit margin of its smartphone business reached 13.3% this quarter, an increase of 4.7 percentage points YoY.
According to Canalys, in the second quarter of 2023, Xiaomi’s smartphone shipments ranked in the top three across 51 countries and regions globally and ranked in the top five across 61 countries and regions globally. The Group’s smartphone shipment ranking rose to No. 2 in both Europe and the Middle East markets, further solidifying its leadership position in the overseas market.
In its Q2 results announced in August, Xiaomi, which also has large consumer electronics and smart manufacturing businesses, saw total revenue reach RMB67.4bn, representing a QoQ growth of 13.2%. It’s adjusted net profit reached RMB5.1bn, a YoY growth of 147%.
The vendor’s IoT segment continued to grow, with revenue from smart large home appliances revenue surging by more than 70%. Revenue from its IoT and lifestyle products was RMB22.3bn, an increase of 12.3% YoY and its gross profit margin reached 17.6%. Xiaomi’s revenue from overseas internet services increased 19.7% YoY to RMB2bn, hitting a record high, accounting for 26.8% of total internet services revenue, up 2.9 percentage points YoY.
The Russia question
Just as the vendor launched its latest range of devices, news emerged that Finnish operators are reevaluating ties with the vendor because it has openly continued to operate in the Russian market despite that country’s illegal war in Ukraine.
Markku Saranpää, director of Telia’s device business, told SuomiMobiil that the telco has given up cooperation with Xiaomi for the time being, and that new models will no longer be available. Elisa also confirmed it had made changes and reduced the selection of Xiaomi devices.
Earlier this year, Ukraine appointed Xiaomi “an international sponsor of war”, but neither the EU nor the Finnish government has imposed sanctions on the company, reports SuomiMobiil. Despite the stance of the Finnish telcos, a number of retailers continute to sell Xiaomi devices.
Needless to say, if other European countries follow Finland, Wang will have his first crisis to deal with.
Getting ready for AI
Like many tech companies based in China, Xiaomi is prioritising R&D and has expanded its AI team to 3000, establishing AI capabilities in areas like visual, audio, acoustics, knowledge graphs, Natural language processing (“NLP”), machine learning and multimodal AI.
In Q2, Xiaomi’s R&D expenses reached RMB4.6 billion, up 21.0% YoY. The vendor expects its R&D investment will exceed RMB100 billion during the five years between 2022 to 2026.