Redmi Going Upmarket: Potential Conflicts with Xiaomi
COVID-19 and China
Redmi Going Upmarket: Potential Conflicts with Xiaomi. PHOTO: Credit to Xiaomi

On March 18, Redmi launches Redmi Note 7 Pro and Redmi 7. 

This is LU Weibing (卢伟冰)'s the first presence at Redmi's release conference. 

Lu also announced so-called "Redmi's Declaration of Independence" saying Xiaomi shall not only focusing on making thousand-dollar phones but also aiming medium-to-high market, or anything products of high quality or extremely cost-effective natures; meanwhile fighting for any unreasonable price premiums.

In addition, LU mentioned that Redmi will focus on global expansion and bet on 5G plus IoT. Xiaomi has the same plan and action.

However, this declaration might potentially conflict with the original purpose of splitting Redmi from Xiaomi.

The purpose of running Redmi as a standalone brand is to upgrade Xiaomi's brand image and allow it to better target upmarket - higher price and better quality; on the other hand, Redmi could be used to focus on and retain its low-to-medium market customers.  

Just before the launch of  Redmi 7, LEI Jun (雷军), the founder of Xiaomi,  posted a question on Weibo, a Chinese social media, that if Redmi is well made, will CNY 2,999 be an acceptable price? Noted that CNY 2,999 is the Mi 9, Xiaomi's newest and first flagship after Redmi and Xiaomi separation.

Blurring the line between Xiaomi and Redmi will cause cannibalization.

In marketing, there is a term called cannibalization describing the situation where a firm is losing market share due to the introduction of multichannel. That means Xiaomi's share in medium-to-high markets might be taken by Redmi. And they two might be involved in the competition against each which will reduce revenues, margins and overall profits. 

Price reference:

Redmi Note 7 Pro only comes with one variant:
CNY 1599: 6GB RAM and 128GB storage

Redmi 7 offers three options: 
CNY 699: 2GB RAM and 16GB storage 
CNY 799: 3GB RAM and 32GB storage
CNY 999: 4GB RAM and 64GB storage

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