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Hugo Barra Defends Xiaomi's International Push Amid Criticism

Two years after expanding outside of China, Xiaomi still makes 91 percent of its sales domestically. But other numbers tell a better story, says the company's global boss.

Asa Mathat for Re/code

While outsiders say Xiaomi has struggled in its effort to duplicate its China success in other countries, global boss Hugo Barra insists the Chinese phone maker is doing well in India and elsewhere.

“I think our international business is off to a pretty amazing start,” Hugo Barra told Re/code in an interview after Wednesday’s launch of the Mi 5 in Barcelona.

Two years after it expanded outside of China, Xiaomi’s home still accounts for 91 percent of its sales, according to IDC analyst Bryan Ma. Barra didn’t confirm that figure exactly, but agreed it was in the right ballpark: “The third-party numbers are not far off from reality.”

However, he notes that Xiaomi is now the third-largest online phone seller in India, just 18 months after it arrived. Plus, online sales are now 30 percent of the market, up from 10 percent of the market before Xiaomi arrived.

In total, Xiaomi shipped 70 million phones last year, below its reported target of 80 million to 100 million. Barra brushed off the notion of slowing sales in China and abroad, saying the company prefers to focus on how many Xiaomi phones are being actively used. He declined to give a sales target for this year.

For 2016, Barra said Xiaomi will largely focus on the international markets it is already in, including India, Indonesia and Brazil.

One of the challenges for Xiaomi, though, is that in many emerging markets people still aren’t buying phones online. That, Ma said, has forced the company to sell through partners, something it prefers not to do, since it barely makes money on the devices it sells directly.

“As much as they are perceived to be an online company, increasingly they have to go to offline,” Ma said. “It kind of reminds me of Dell.”

Even in China, Xiaomi has started selling in both its own retail outlets and through a handful of partners. The Mi 4S, also announced this week, will sell through an electronics retailer that Barra described as the Best Buy of China.

“We have a very aggressive deal because we don’t have a lot of margin for anyone, including ourselves,” Barra said. Xiaomi is focusing initially on China for the Mi 5, which packs top-of-the-line features in a phone that starts at around $300. The device will launch March 1 in China, with other markets to follow.

Devices like the Mi 5 also benefit the company indirectly elsewhere, establishing it as an aspirational brand “even though in markets like India they are still selling a lot of these low-end Redmis.”

Barra agreed, noting that the launch should help next week’s launch of the company’s mid-tier Redmi Note 3 “phablet” in India. And what India lacks in high-end demand it makes up for in terms of the sheer size of the smartphone market. Barra noted that the country has 400 million Internet users and that last year 110 million phones were sold there. He said it is possible India will pass the U.S. this year to become the second-largest global market, in terms of number of phones sold.

Barra said that boosting the company’s global image is a key focus for 2016, “even though it will take us some time to work our way” into developed markets.

“We want the brand to become well known, so that over time we are well positioned, and when we come we are welcomed,” Barra said. And yeah, still no word on when they might sell phones in the U.S.

Correction: An earlier version of this story said that Xiaomi, not India, had 400 million Internet users and had sold 110 million phones.

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