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Xiaomi Steps Out of China, Brings Cheap Smartphones to Singapore

Xiaomi’s global expansion has begun.

Just a few months after leaving Google (GOOG) to become vice president at the upstart Chinese electronics company, Xiaomi’s Hugo Barra flew to Singapore for a press conference today to announce that its mid-range Hongmi (“Red Rice”) phone will soon go on sale for $134 in the tropical city-state. As Barra told local media, Singapore’s relatively small but educated urban population is a logical first place to start expanding sales outside of Greater China. Lessons learned about sales channels and local customization in Singapore will prove useful as Xiaomi plots its expansion elsewhere in Southeast Asia, including Thailand, Indonesia, and Malaysia.

Xiaomi’s strategy is to sell low-cost, high-functionality smartphones at razor-thin margins and then make money from software sales. The company sold 18.7 million smartphones in Greater China last year, up 150 percent from 2012. Its users downloaded more than 1 billion apps, boosting revenue to $5.2 billion in 2013. Xiaomi also launched a smart TV last year.

For the moment, Barra said, Xiaomi does not have plans to expand into the U.S. and Europe. Last September he explained to technology news site that “the sweet spot for Xiaomi … is where the equation of quality and affordability works  because it’s in those markets you can replicate what the company has done in China.” He mentioned “places like India, Russia, Indonesia, Latin America, Thailand.”

Xiaomi founder Lei Jun took to Weibo (SINA), China’s leading microblog, on Dec. 31 to declare his goal of shipping at least 40 million smartphones in 2014—more than double last year’s impressive total. First stop, Singapore.

Larson is a Bloomberg Businessweek contributor.

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