Will Xiaomi Increase Pricing of Its Phones in Overseas Markets?

On the evening of February 24, Xiaomi held a new product launch conference in Barcelona, officially launching its first 5G smartphone, namely the Mi MIX 3 5G version and the Xiaomi Mi 9. The price of the latter is 449 euros (6GB+64GB), which is slightly higher than the Chinese version.

Lei Jun, the founder, chairman, and CEO of Xiaomi Group said that this is the last time Xiaomi has set the price within 3,000 yuan. In this regard, the media asked Wang Xiang, senior vice president of Xiaomi Group, ‘Will Xiaomi gradually increase the price overseas and go to the middle and high-end products?’

Wang Xiang said that this issue is divided into two parts. The first part refers to the cost, and this year’s technology is very different from three or five years ago. For example, a smartphone may sport a very simple low-pixel camera five years ago, but today, the flagships like the Xiaomi Mi 9 are using three camera lenses, and the cost is very high. The processor capacity is also high, and the cost of Qualcomm Snapdragon 855 has also increased. There are also rising manufacturing costs and material costs, and it is difficult to artificially make it a price.

However, manufacturers don’t want to increase the cost, but they have. As a company, by promoting technological progress to improve efficiency and reduce costs, this is the kingly way, artificially falling is definitely not acceptable.

Wang Xiang stressed that at present they have two series of Redmi and Xiaomi. Let Redmi focus on the ultimate cost performance, do the best performance, minimize the price, and use the most effective way to make products. Xiaomi will focus more on innovation and development. By experimenting with new materials and new and cool designs, these will increase costs.

In overseas markets, Xiaomi may do some combination and need some time. Take for example the European market, and you’ll find that the price Xiaomi converts to yuan in Europe is much higher. Why? Because the implementation costs are different. There is a 20% VAT in Europe. This is OK, but there is another tax in Europe, popularly called ‘memory tax’, which in fact it protects content. For example, in France, 64GB or 128GB smartphone may have a tax of 8 to 10 euros. There are many other costs, such as the cost of the channel. So if you look closely at the cost structure in Europe, you will find that direct conversion is very difficult and can’t be converted.