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Xiaomi is Facing Headwinds in China, India, and in Russia in Q1 2022

by Yiwen Wu | 5月 06, 2022

Xiaomi smartphone shipment dropped -20% YoY in Q1 2022, blaming to the mixed performance in China, India, and Russia, Xiaomi’s top 3 markets. Xiaomi is facing strong headwinds in these three markets but for different reasons.

China is the largest market for Xiaomi in Q1 2022. Compared with other markets, China market is posting unique challenges to vendors: the spiking covid cases combined with the relentless lock-down decision by local government has disturbed local economy vastly. The gloomy economic outlook is dampening consumer spending power amid the fear of income security, and the purchase of non-essential products (like smartphones) is reduced. Xiaomi and other local players are encountering the extra costs related to lockdown policies and the disruption risks in manufacturing and logistics.

India is the second largest market for Xiaomi. Xiaomi largely underperformed the overall market. This blames mostly to the supply issues, inflationary, and the intensified competition in local market. Moreover, Xiaomi is facing headwinds from local authorities. India authority required Xiaomi to pay nearly USD88 million in import duties in January for alleged tax evasion and seized USD 725 million of Xiaomi’s asset in April over alleged illegal remittances. Xiaomi’s initial response is conciliatory, and it remains to be seen how the cases are evolving in the following weeks. But the damage has already taken place. The two back-to-back news is damaging Xiaomi’s local brand image in addition to the potential volume reduction in local market. We consider the current situation favours Samsung and local brands.

Russia is the third largest market for Xiaomi, which also posted massive decline this quarter amid the Russia-Ukraine war. Central Eastern Europe’s volume share for Xiaomi dropped significantly this quarter. Ukraine economy and consumer demand have been destroyed, while the sanction towards Russia has badly hurt the country’s economy in the long run. Consumer spending power is damped amid exchange rate volatility and local currency depreciation, as well as job security worries. This put Xiaomi in a risky position in the country, where Xiaomi was the second largest vendor in 2021 by volume. As a Chinese brand, Xiaomi needs to carefully manage its brand image both in Russia and in Western countries. This has posted extra geopolitical risks in overseas markets for Xiaomi.

Looking forward, the slow-down in China, the uncertainty in India, and the ongoing Russia / Ukraine war will continue to cast shadow on Xiaomi’s global performance in 2022.

Our latest report on Xiaomi Q1 ‘22: Xiaomi: Headwinds in China, India, and Russia. WSS clients could access the report via this link.

Meanwhile, we have employed SA Lens to evaluate vendors and compare them with their peers. Below is the evaluation on Xiaomi’s performance in Q1 2022.

Xiaomi SA Lens 2021 Q1

Previous Post: Q1’22: Vivo: Sharpest Ever Decline in Volumes | Next Post: Q1 2022, Honor is Making Amends by Expanding Premium

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