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Xiaomi launches new phone to counter Huawei challenge

Chinese smartphone maker Xiaomi has launched its latest flagship phone, in an effort to revive its dwindling sales momentum and bridge the gap with rival Huawei.

The Redmi Note 3, which retails in China for Rmb899 ($140), was the centrepiece of the launch presided over by Lei Jun, Xiaomi chairman. The device has a metallic body and upgraded battery, as well as a fingerprint sensor — a feature that rival Huawei rolled out earlier this year and that Xiaomi has been criticised for omitting from previous models.

Aside from the high-tech innovations, the Redmi Note 3 featured another telling feature: packaging designed to better sell in stores. Analysts said that the decision was an important marketing move given that Xiaomi, which formerly relied on ecommerce for virtually all its sales, has become increasingly reliant on offline sales.

While ecommerce allowed Xiaomi to save on costs during its start-up period, offline sales have become vital to preserving the technology group’s position in China’s top echelon of smartphone makers.

CK Lu, Gartner’s China smartphone expert, estimates that offline retail channels now account for half of Xiaomi’s sales, though the smartphone maker said that its sales were 70 per cent online.

“As sales of online channel is hitting ceiling, Xiaomi in the past year has being increasing its push into the retail market,” said Mr Lu.

Xiaomi is not focusing on market share as an indicator of success, said Mr Lei at the launch, amid conflicting data about whether Xiaomi has been recently overtaken by Huawei as China’s top seller of smartphones.

“It doesn’t matter how much competitors bad-mouth each other,” said Mr Lei. “Under the common joint efforts of all our competitors, we have made Chinese phones the mainstream product in the global market. We’ve all improved together.”

Earlier this month, figures from Canalys, the Shanghai-based research group, showed Huawei leading Xiaomi in the Chinese smartphone market. The figures were a reversal from late last year when Xiaomi had briefly taken the number one spot in the hyper-competitive China market.

Further data from consultancies IDC and Gartner were inconclusive, with IDC showing Xiaomi ahead in the three months to September with 15.8 per cent market share, while Huawei lagged behind on 15.6 per cent.

Gartner, however, had Huawei slightly ahead with 15.6m in sales for the three-month period, compared with 15.1m for Xiaomi.

Huawei’s smartphone sales have grown more than 80 per cent year-on-year in China, while by some measures Xiaomi has seen year-on-year declines, according to Canalys. IDC, on the other hand, reported that Xiaomi had year-on-year Chinese smartphone sales growth of 11 per cent in the three months to September.

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