Xiaomi expands Europe presence

Firm's Paris store reflects accelerated push to establish global reputation

Chinese technology giant Xiaomi opened its first authorized store in Paris on Tuesday to tap the local market and gain core competency in Europe.

The move comes after Xiaomi announced earlier this month that it plans to march into France and Italy on May 22 and 24 respectively. The openings mark Xiaomi's latest steps to seek new momentum in Europe and establish itself as a globally recognized brand.

Xiaomi HK Ltd has authorized connected device maker iHealthLabs Europe SA to open the Mi store in Paris, according to parent company Andon Health Co Ltd, a Chinese healthcare electronics manufacturer.

According to an official statement from Andon, the newly authorized store is located in Chatelet, a bustling commercial district in central Paris. Andon said it has set an initial target of establishing five authorized Xiaomi stores in Paris in 2018.

In 2014, Xiaomi partnered with Andon to expand its presence in the healthcare market, setting up the joint venture iHealth. Andon has transferred all its foreign assets, including copyrights and facilities, to the joint firm. Xiaomi agreed a $25 million financing deal with iHealth, granting the former a 20 percent stake.

Xiaomi, one of China's largest smartphone vendors, first made inroads into Western Europe by entering Spain last year. Now it has four authorized stores in Spain and is one of the country's top three largest smartphone brands.

Jia Mo, an analyst at market research firm Canalys, said the business opportunities will gradually decline in consolidated markets such as China, the United States and India.

"Seeing the new trend, leading smartphone vendors are now targeting markets such as Europe to expand their global presence," Jia added.

According to Canalys' latest quarterly report, smartphone shipments fell 6.3 percent year-on-year in Europe during the first quarter of this year. Xiaomi won fourth place in terms of volume, shipping 2.4 million smartphones with around 1,000 percent year-on-year growth, accounting for 5.3 percent of total smartphone shipments to Europe.

Canalys said Xiaomi is working closely with distributors to drive products into retail stores in Europe, and is operating at a substantial net loss to drive smartphone shipments to boost its market capitalization before launching its IPO.

"This is not sustainable in the long term. Xiaomi will eventually have to shift its revenue and cost structures, as the top three of Samsung, Apple and Huawei have now done, toward profitability," the report noted.