PESTLE Analysis of Xiaomi

PESTLE analysis of Xiaomi uncovers the Political, Economic, Sociocultural, Technological, Legal, and Environmental affecting this tech giant.

Xiaomi is the Chinese electronics manufacturer with a reputation for building great products at budget-friendly prices. Following recent investment, Xiaomi is valued as the fourth largest tech company in the world, so they're clearly doing a lot of things right. In today's article, we're going to use PESTLE analysis to uncover the Political, Economic, Sociocultural, Technological, Legal, and Environmental affecting this tech giant. Then, we'll be able to see where Xiaomi should focus its future efforts for optimal results.

Political

Xiaomi is a Chinese brand in every capacity. They design, manufacture, and sell many of their products in the country. Naturally, the political factors affecting Xiaomi are related to its being a largely-Chinese organization. So what are these political factors?

Well, for starters, Xiaomi is exposed to all of the deeply-political trade and import laws between China and other parts of the world. There are only growing amounts of tension between the US and China, especially following the election of US president Donald Trump. Even though Xiaomi hasn't yet attempted to enter the US market, it seems it will only struggle more and more to do so due to the rising import tariffs.

What's more, Xiaomi is said to have close ties with the Chinese political system. While this is generally good news for selling their devices within the country, it adds extra pressure when the manufacturer looks to broaden its markets to countries such as the United States.

Economic

From an economic point of view, it's a good time for anyone to be in the consumer electronics market. With rising disposable incomes, consumers have more and more money to spend on devices they couldn't previously afford. This is broadening the reach of many electronic devices — especially smartphones — and creating plenty of demand for the suppliers who are willing to fill it.

Of course, Xiaomi is no exception when it comes to seeing this growing demand. For Xiaomi, there are more and more opportunities to sell their devices, to more users and in a growing number of countries.

Xiaomi is an especially powerful position, since its devices are often targeted towards the more budget conscious consumer. While top-tier devices from premium manufacturers such as Samsung and Apple may not be affordable for new smartphone users in developing countries, Xiaomi devices certainly are. Since Xiaomi is considered one of the best electronics manufacturers in its price tier, it should see a lot more business as new consumers look for their first devices.

Sociocultural

From a sociocultural perspective, the desire to own and use mobile devices is also growing. This is yet another reason for consumer electronics manufacturers like Xiaomi to celebrate. Not only can more and more people afford gadgets such as smartphones, more and more people want those gadgets.

Unfortunately, Xiaomi being a Chinese brand presents its own set of problems on the sociocultural level. Many Western consumers believe that Chinese products are inferior to the alternatives, associating the "Made in China" label with all-round poor quality. This is one of the reasons Chinese smartphone manufacturers (including Xiaomi) struggle to break into the US market.

Technological

Generally speaking, Xiaomi products are considered to be quite technologically advanced. Many users are impressed at the high technical specifications that the manufacturer can pack into such a wallet-friendly device. This shows that Xiaomi is relatively competent when it comes to producing high-quality tech, en masse, at budget prices.

There are a wave of new technologies which Xiaomi and other smartphone manufacturers could choose to pursue. Software areas such as artificial intelligence and machine learning show immediate use cases for personal assistant technology on mobile phones, while new hardware is also reaching the market. The fifth generation of mobile communication technology, 5G, is soon to be implemented in new devices. Xiaomi may be able to leverage its tech capabilities to use 5G in their own devices, allowing them to stand a head above the crowd of other consumer electronics manufacturers.

There's also the area of wearable technology. With products such as smart watches, headbands, and others, it looks like a new wave of electronic ubiquity might hit us. If Xiaomi is quick to stay on the forefront, this could present quite an opportunity.

Legal

There aren't any legal issues that affect Xiaomi more so than other consumer electronics manufacturers. For consumer electronics manufacturers in general, there are quite a number of legal matters that cannot be avoided.

For starters, there are various patent and copyright laws that determine what Xiaomi can and can't do with its hardware. However, there tends to be a lot of commonality between electronic devices, so it's clear that these rules aren't too strict.

Furthermore, there are a growing number of data privacy regulations, especially in the EU, that simply must be complied with if Xiaomi is to operate in the corresponding markets. Thankfully, data privacy laws tend to affect software providers more so than hardware providers.

Environmental

Environmentally speaking, Xiaomi is facing the same issue as everyone else: how do we create better devices while taking less of a toll on the environment? Xiaomi is forced to deal with pollution regulations in China, but that isn't too much of an issue on its own.

Instead, Xiaomi likely wants to be proactive about environmental matters, and push itself to be seen as one of the greener manufacturers on the market. This means reducing its production line carbon dioxide output, while finding more sustainable alternatives to the various minerals used in its devices.