Xiaomi bets on offline expansion

Lei Jun, CEO of Xiaomi, shows the newly released handset Mi 6 on Wednesday in Beijing. [Photo provided to China Daily]

Chinese smartphone vendor Xiaomi Corp, best-known for its online sales strategy, said on Wednesday that it aims to generate 70 billion yuan ($10.2 billion) in revenue from its bricks-and-mortar stores in the next five years.

The announcement came as the Beijing-based company plans to open 1,000 stores in China within three years.

Lei Jun, CEO of Xiaomi, said: "We can replicate our online success in bricks-and-mortar stores. Many people said we had to raise prices once we move offline. But we proved that optimized operating efficiency can help us remain cost-effective."

The company opened a Mi Home retail store in a Beijing high-end shopping mall earlier this month, which Lei said has been overwhelmed with consumers and highlighted that its offline retailing strategy is a success.

The company said it currently has 72 Mi Home stores in China, but did not disclose their sales performance.

Xiaomi also unveiled its latest flagship handset, the Mi 6, on Wednesday, highlighting the company's intensified efforts to experiment with new industrial designs.

Mi 6 comes with four-sided curved glass and a stainless steel frame. It is the first Chinese handset to come with a Snapdragon 835 processor, the latest mobile chip from Qualcomm Inc.

Xiaomi founder and CEO Lei said: "Mi 6 is the culmination of our seven years of research and development in the smartphone industry."

Priced from 2,499 yuan, the new handset will hit the streets on April 28 in China, and will make its way to selected global markets at a later date.

Xiaomi's handsets are available in more than 20 countries and regions. It is among the top five vendors in India, Ukraine, Indonesia, Myanmar and Israel, the company said.

The company has started manufacturing its devices in Indonesia and India, as the initial success in South Asian countries is expected to spur big demand for its smartphones.

Tay Xiaohan, an analyst at International Data Corp, said in a report that "in the past, Xiaomi started the trend of selling cellphones online, and other vendors soon followed suit".

However, with China's smartphone market reaching saturation point, companies are now pouring more resources into offline retail, Tay said.

But C.K. Lu, principal analyst at consulting firm Gartner Inc, said: "It will be difficult for firms such as Xiaomi to establish a successful offline retail network in the short term, as they lack both experience and talent."