Xiaomi falls flat in world’s fourth-largest smartphone market

A woman on the street in Salvador, Brazil. Photo credit: Francisco Osorio.

Nearly a year after Chinese gadget maker Xiaomi expanded to Brazil, its first market outside of Asia, the company is now rethinking its strategy. While Xiaomi will continue partial phone sales in Brazil, some team members will return to Beijing HQ, the firm has announced. (Updated four hours after publishing: the verb phrase “crashes out” in the headline has been misinterpreted, so it has been replaced.)

Xiaomi’s phone manufacturing line at a Foxconn factory in Brazil is now in doubt as well. It started making the Redmi model in the country early July ahead of the Brazil launch.

It’s a major setback for the struggling company in the world’s fourth-largest smartphone market.

Newer Xiaomi phones like the Mi5 won’t make it to Brazil any time soon.

Samsung dominates Brazil, according to data from Counterpoint Research. Motorola is second; LG third; Apple fourth. Alcatel, a spin-off from TCL, is fifth – and the only Chinese brand to have cracked Brazil’s top five, despite concerted efforts over the years by older brands like Huawei and ZTE.

Unravelled

Hugo Barra, Xiaomi’s Brazil-born global VP, told the Chinese-language 21st Century Business Herald yesterday that production regulations and online sales tax policies were making it a difficult market.

Brazilian President Dilma Rousseff now faces impeachment proceedings as the country grapples with an economic crisis – plus the threat of the Zika virus plagues the upcoming Rio Olympics. Photo credit: Jonas Pereira/Agência Senado.

Xiaomi has chosen not to launch any new products in Brazil in the short term.

Sales of the Redmi 2 phone will continue in Brazil through a handful of ecommerce partners, Xiaomi said today in a statement. “With the constant changes in manufacturing rules and tax regulations in Brazil since end 2015 and the fact that the rules are not yet solidified, Xiaomi has chosen not to launch any new products in Brazil in the short term. However, we are continuing to monitor the regulations and will plan new product releases at the appropriate time,” a spokesperson told Tech in Asia.

“Our ecommerce, customer support, technical support, logistics, and finance teams will continue to operate in Brazil as usual.”

Two of Xiaomi’s Brazil teams will exit the country. “We have decided to centralize our marketing and social media teams at the Beijing headquarters to continue coordinating related activities,” added the spokesperson.