Much more than "Made in China": why an iPhone and a Xiaomi are not the same -


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Friday, 16 February 2018

Much more than "Made in China": why an iPhone and a Xiaomi are not the same

During the last months we are living a real furor for the Chinese mobile phones . It may be that Xiaomi or OnePlus take the covers and the multitudinous presentations, but Meizu, Honor, Leagoo, Oukitel, Doogee continue to steal market share from the large without complexes, offering terminals that you may not see on billboards but leave with your mouth open for its value for money or batteries with autonomy scandal .

But let's go back to Xiaomi. The Chinese, who recently landed in Spain at last, have the aura of being the Chinese Apple and, judging by its exponential growth, it is not surprising that in some countries like Spain are taking colors to large brands. No wonder : the flagship of Xiaomi costs less than half the iPhone X.

Thus, it is not surprising that your brother-in-law boast at the Christmas dinner with pearls like this:

    With what your iPhone costs, I buy four Xiaomis. 

Or this one:

    My Xiaomi does the same as your iPhone. 

And the mythical one:

    You pay to see the bitten apple. 

But are there any differences between Xiaomi and Apple? Are we paying more for the brand? Why is there so much price difference between one brand and another, if at the end of the day both are made in Asia? It is time to analyze in depth your business structures, production and objectives.

Xiaomi and Apple have different business models

As Fortune explains, the great challenge of Xiaomi is to appear in the same sentence as Apple . How presumptuous, right? Not so much, if we take into account that even during their presentations they show the iPhone without any kind of dissimulation and talk about improving it. Apple and the iPhone is your reference.

Xiaomi phones are great terminals, that is beyond doubt: they have premium range functions at ridiculous prices and a layer of Android moderately tolerable - we insist, for its price and if you do not come from iOS -, but they are not in the same market that Apple or Samsung and have not even adopted the big business model .

You just have to look at volumes and margins. Xiaomi, as a good typical Chinese business, adopts the strategy of large volumes and a small margin of profit. On the other side of the scale is the specialization, where you usually opt for a low volume of production and large margins, after all you're the only one doing that, you're the specialist. But make no mistake, the ideal in capitalism is always to achieve large volumes and large margins . That's where any company wants to be all their life.

To give you an idea, in some products, Apple is achieving a profit margin of 30-35%. In contrast, the most that Xiaomi achieves is 20%. By the way, do you know where Xiaomi achieves its highest profit margin? As Forbes explains, in the technical service.

They are different business models and in fact sooner or later Xiaomi will adapt if you want to compete face to face : physical stores, more and better support, more purified Android layers, advertising campaigns, solve your legal problems, R & D & I and patents own ... secondary things for a manufacturer that is dedicated to copy, but fundamental for a leading technological brand. After all, it already has a huge customer base.

In fact, it is doing it: as it shows its expansion in Spain , the guarantee of its products in Europe or its timid advertising campaigns. If Xiaomi wants to be a big one, he will have to have great infrastructure and strategy. And of course, it will raise your prices .

Now is the time to say that logically, buying your products in Xiaomi Spain is more expensive than doing it as usual for obvious reasons, but it is still light years away from Apple's prices .

We have talked about their business models and why it is unfair to compare Apple with Xiaomi, but there are more differences .

Why are Chinese phones cheaper than an iPhone?

But the comparison of Chinese mobile phones goes beyond Xiaomi, which as we have seen is already in full growth phase towards a more demanding business model, but towards a flagrant reality: an iPhone - or a Samsung - can not compete with you to you with a Chinese mobile because they simply do not play in the same league . The reasons are many and varied.

Production cost savings

Apple and Xiaomi manufacture their products in China, where the working conditions of employees are not the same as those we have in other countries. That is a black point for both. And it's not casual: China offers one of the cheapest labor in the world .

But brands like Xiaomi, Meizu or Huawei have the advantage that they build their phones locally, saving on transportation costs . Something that for example does not happen with Apple, but neither with Samsung, HTC or Sony.

High technology, but not revolutionary

Another important factor is that Chinese mobile phones have powerful and updated hardware, seeking a perfect balance between price and performance. But they can not be compared to Apple or Samsung hardware, which uses higher quality components .

And you can go to Amazon and buy a 128GB SSD from Samsung or buy the cheapest one there is. On paper, they will be the same. But reality is not like that .

In some cases, Chinese manufacturers opt for Mediatek processors, which are much cheaper than Exynos, for example. If we go to RAM, Chinese manufacturers can opt for DDR3 instead of DDR4. For the cameras, they will use Sony sensors. Same specifications, but it's not the same .

As for the software layers: if iOS is per se more stable, fluid, safe and with a cleaner design than Android, I do not even want to tell you when we talk about Chinese proprietary layers , or apps that are not even configured for the dimensions of your screen.

Do not say design, say plagiarism

What Chinese manufacturers achieve are great designs at adjusted prices thanks to inspiring compositions, materials, etc. In fact, the overwhelming success of Xiaomi has raised certain blisters even in Apple, where Johny Ive accused them in 2014 directly of copying them, as you can read in ABC . But is not the copy the biggest sign of admiration? Yes, but when it starts making too much noise, it's annoying and it's illegal.

In India, Xiaomi has another open front with the giant Ericsson precisely because it does not pay for the patents of certain technologies used in its phones, according to Forbes . And in China it may be worth everything, but intellectual property and copyright are serious issues and in the long run, damage the entire industry .

i + D + ... what?

While Apple patents things every week and surprises us from time to time acquiring companies like Shazam or others that allow it to continue growing and expanding knowledge, for others the level of research, development and innovation is not the same: they just see what they throw the leading brands and try to copy it , serve as an example the iPhone X and its long list of imitators .

Thus, Samsung, Google, Huawei or Apple innovate and invest in surprising us with products that will be the cream of the market. Once they reach the market, they are analyzed and torn apart to adapt to other terminals more or less efficiently. Technology reaches all sides, but not at the same speed or with the same quality .

Of course, forget security updates or the latest Android news. And start crying with your stock apps.
Online sale

The online sale is the favorite of Chinese manufacturers simply because of the brutal savings involved in not building their physical stores and the necessary infrastructure for distribution and support .

When you pay for an iPhone 8 - or for a Samsung Galaxy S8 - not only are you paying for the terminal, you also encourage the Apple Store to keep opening and there are employees in it .

Without marketing campaign

Xiaomi has shown that word of mouth is as effective as the best marketing campaign that exists . Meanwhile, big brands pay to appear in the latest episode of Modern Family, be the first new year announcement or hang a huge banner on the door of the sun.

Social networks are much cheaper and very effective selling tools , especially for an audience that is looking for a good cheap terminal.

Limited quantities

Surely you've ever wondered why OnePlus is capable of launching two flagships a year. Very simple: it is part of your business model, which creates products on demand . If people think that a phone is a bargain and there are few in the market, they will run to buy them.

After all, we imagine that creating the OnePlus 5 did not cost too much in design , since it looks too much like a certain mobile phone that was already on the market .
Sale of accessories

As their profit margins are very low, selling accessories with inflated prices is a very profitable way to increase your profit: from bags to shoes, going through backpacks. Can you imagine Apple or Samsung selling shoes to balance their accounts?


That depends solely and exclusively on you . The reality is that the quality of some Chinese manufacturers is spectacular, and if Xiaomi is where it is, it is precisely because of that. Nobody has given them anything.

Maybe they do not use the most cutting-edge materials, the best components or the most refined coats, but their price-quality ratio is insultingly undeniable. In addition, you may only want your phone to call, social networks and WhatsApp. But no: Apple and Xiaomi do not play in the same league. The comparisons are odious . 

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