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Chinese Smartphone Giant Xiaomi Makes Debut In U.S. Market

Chinese smartphone conglomerate Xiaomi is dipping into the U.S. retail space, announcing on Thursday the sales of its Mi accessories.

Smartphone conglomerate Xiaomi is dipping into the U.S. retail space, revealing on Thursday the sales of its Mi accessories like headphones, phone power banks and wearables on its retail online store Mi.com, according to Reuters.

While the Chinese company only will sell accessories, the move signals a long-term strategy to sell its trademark Mi smartphone portfolio in the U.S. Partners of Xiaomi's global competitors, like Samsung and Apple, are wondering how the company's entrance will affect the market at all levels.

"I think people will pay close attention to this move," said Rick Jordan, director of sales and strategic alliances at Toronto-based solution provider Tenet Computer Group. "At the end of the day, it's added competition into the smartphone market. It comes down to market share and what consumers will buy into."

[Related: Partners: Apple Watch's Release Will Boost Smartwatch Market]

According to market research firm IDC, the five-year-old company has faced staggering growth levels with its 16.6 million shipments in the fourth quarter of 2014, growing 178.6 percent from the previous year's fourth quarter of 5.9 million global shipments.

Xiaomi emerged as a Chinese smartphone vendor, with devices like the Redmi 1s 4G and Mi4, known for its low price-point devices and popular flash sales. The company has ventured beyond China to probe other markets this past year, recently releasing its Redmi Note 4G in India.

Various partners had mixed ideas about which smartphone vendors would feel the most pressure if Xiaomi released its Mi mobile devices in the U.S. market in the future.

Jordan stated that the Chinese company had the same consumer strategies as Apple, and would put increased pressure on the Cupertino, Calif.-based vendor's market share.

"Xiaomi phones are very consumer-focused, and does what Apple does at a cheaper price," he said. "This means Apple will have to be more aggressive. Apple's done a good job, but many people in America are looking for the best bang for the buck. And, in that case, having more inexpensive products might be more important."

But other partners think the future potential move could eat into the consumer base for Samsung's less expensive smartphones.

"It seems like a really interesting entry into the U.S. market," said Michael Oh, founder of Tech Superpowers, a Boston-based Apple reseller. "I think, by and large, if Xiaomi succeeds in the U.S., it will hurt Samsung and Android, more so than Apple … unless Xiaomi is able to provide some radically different value propositions, I doubt that they'll do anything more than Android has."

Analyst Jack Narcotta, devices analyst at Hampton, N.H.-based market research firm Technology Business Research, said that Xiaomi's entrance into the American market is "a low-risk move into a big market."

"It's a smart move that will help Xiaomi test the U.S. market," he said. "Their biggest obstacle right now is that they have no brand awareness, so this is a good opportunity for them to test out consumer consideration. They have a steep hill to climb, and Xiaomi needs to ask how they will bring more value to the market."

According to IDC, Xiaomi was the fifth-place global smartphone vendor in the fourth quarter of 2014, taking 4.42 percent of market share. The company emerged on the radar screen due to its rapid growth and solid demand in China, and its steady release of new devices, like the Mi4 LTE.

Despite Xiaomi's rapidly flourishing success in China, Narcotta warned that the company faces a plethora of challenges as it makes headway in the U.S. market.

"Because Xiaomi has no brand awareness at this point, they’re facing a very strong and entrenched incumbent competition in the U.S. market," he said. "They're not just competing with brands in mobile, but also with companies selling wearables and batteries. That's going to be a wrinkle for them at this time."

Xiaomi's president Lin Bin said that the company will launch the wearables and headset devices in coming months. According to Reuters, the company said it will also further expand into countries like Brazil.

PUBLISHED FEB. 13, 2015

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