How is Xiaomi able to sell such cheap phones with moderate specs and still be in business?
In: 4
Apple relies on high margin/low volume to make their money. Android manufacturers generally relies on other avenues to make money, relying on high volume/low margin and ancillary sources of profit like advertising. Some do make money off of higher margins, but really only Samsung can compete on that end. Everyone else is on a low margin/high volume model. Then you got Google who doesn’t particularly care about the sale of devices, they care about the data from the platform.
Also, you need to keep in mind that the general strategy from Chinese manufacturers has been to undercut competition via subsidies or lower regulation from the CCP government. I don’t know if Xiaomi is doing this, but there have been numerous other examples spread out over the last few decades. Huawei made bank off of undercutting Lucent and Cisco for networking equipment. The CCP heavily subsidized the solar cell (and green energy) industry and put a lot of non-Chinese firms out of business. They’ve made concerted efforts to make sure that they keep rare earth materials prices low to prevent mines in other countries from operating profitably. Biggest example was a few years back when they flooded the market right before a mine in the US re-opened and it had to close down shortly after because they could not operate profitably.
Latest Answers