At one point, Xiaomi made the best-selling smartphones in China. In 2014 and 2015, all eyes (and wallets) were on the brand. But things are different these days.

The Beijing-based smartphone maker saw sales decline 38% in China compared with last year, according to market analysis company Counterpoint.

Xiaomi now sits at fifth place in its home market as competition from other local brands has ramped up. So the company is looking overseas for growth, which is precisely where competitor Huawei has fallen on hard times because of US trade restrictions.

Xiaomi is no stranger to experimenting with designs. In September, it launched the concept smartphone Mi MIX Alpha with a screen that wraps around to the back. (Picture: Jason Lee/Reuters)

Xiaomi built its brand in China by offering budget phones with good hardware. But everyone else soon started copying the model. Brands like Oppo and Vivo, along with Huawei sub-brand Honor, flooded the market with low-end and mid-range phones, sometimes with brave design features to attract more attention.

Xiaomi followed Huawei’s tactic by creating a low-cost sub-brand of its own called Redmi. The sub-brand has also tried to move upmarket, but things haven’t been going smoothly.

“Huawei and Apple have held a strong footprint in the Chinese premium market and user-stickiness there is strong,” said Flora Tang, a research analyst at Counterpoint. “It is not easy for Xiaomi to grab shares from them.”

As Xiaomi’s market share at home has dwindled, Huawei has climbed to take 42% of the market. This happened as consumers at home rallied around the homegrown tech giant after the US placed the company on an entity list that restricts it from buying US tech, like Google’s apps and services for Android. 

Consumers outside China expect Android phones to come with Google Play, Google Maps and YouTube, and Huawei’s don’t. But Huawei’s ban is turning into an opportunity for Xiaomi.

“It’s true that the crisis of Huawei in overseas markets may give opportunities for other Android brands to gain shares Huawei has lost,” Tang said.

The company had its first smartphone launch in Berlin last month, when it presented the Redmi Note 8 Pro. Germany is one of the largest mobile markets in Western Europe.

Xiaomi has become popular in Eastern Europe for its price-to-quality ratio. The Redmi 8 Pro, which includes a 64MP camera, is Xiaomi’s first smartphone launch in Berlin. (Picture: Xiaomi)

But Xiaomi’s push into Europe isn’t new. The company has been expanding in the continent since the second half of 2018, according to Tang. Its sales have grown 27% compared with last year with support from telecommunications company 3 Group Europe and its retail channels. Xiaomi now says it’s the fourth most popular phone brand in Western Europe.

Xiaomi also opened a camera technology R&D hub in Tampere, Finland in October, where the company will likely focus on software to improve smartphone cameras. Xiaomi’s recently launched CC9 Pro made headlines for its 108-megapixel camera, which uses a sensor from Samsung.

Xiaomi isn’t just focusing on Europe, though. It’s seen promising growth in other parts of the world. It’s already the top smartphone brand in India -- it sold 12 million smartphones there in October. Xiaomi has also spread to Russia and Africa, and it’s expanding to Japan next year.

And even though it’s lost market share at home, Xiaomi is still doing relatively well there. The Redmi K20 series sold 4 million units in four months. To help combat competition, Xiaomi plans to launch more than 10 5G phones in 2020.

But one big challenge for Xiaomi’s push abroad could be convincing Europeans that a Chinese company can safeguard user data, which has already become an issue for Huawei.