[The Editors' Verdict] Why Xiaomi's Challenge Is Cause for Concern

Products made by Chinese companies are reasonably usable, but their durability is lacking, making them unsuitable for long-term use. While it could be argued that this is a hasty generalization based on low-cost products that were never intended to be durable, this is the prevailing perception among Korean consumers who have used products from Chinese companies that have entered the Korean market so far.

Products labeled "Country of Manufacture: China," where global companies only handle manufacturing in China, are somewhat better in this regard. However, "Made in China" products for which Chinese companies take full responsibility from A to Z have a reputation for poor quality in Korea. This is also why, when entering the Korean market, Chinese companies emphasize "value for money" and "satisfaction for money" rather than "high performance" or "durability."

After completing my assignment as a correspondent, I shipped a Xiaomi 65-inch 4K TV from Beijing to Korea in July 2020. At that time, Samsung and LG were selling TVs with similar specifications for several million won, so the mere fact that a major Chinese company's latest large TV was priced at 700,000 won was enough to make me open my wallet.

Recently, I disposed of the Xiaomi TV. For the past year, the screen had intermittently failed to display, and recently, no matter how many times I tried turning the power on and off, only the sound would play with no picture. When I finally managed to contact an after-sales service (AS) center, they told me that not only was service unavailable for overseas purchases, but even if a private repair shop could fix it, the cost of parts and repairs would likely be so high that it would be better to simply buy a new TV.

While living in Beijing, I purchased and used about 10 different Xiaomi products. The list includes not only small appliances such as electric kettles, fans, scales, and desk lamps, but also higher-priced items like electric scooters, TVs, air purifiers, and robot vacuum cleaners. I wanted to see just how far Xiaomi's reputation for "unexpected excellence from China"?first demonstrated with their value-for-money portable phone batteries?could go. Of course, I am not currently using any of these products. Most have broken down or their performance has declined to the point of being unusable. The electric scooter, which could be ridden on the road with just a battery charge, needed a new battery after about a year of use, and the replacement cost was nearly as much as buying a new product.

Although Xiaomi opened its first offline store in Korea last month in Yeouido and is working to expand its presence among Korean consumers, after-sales service remains insufficient to compensate for its durability issues. Without its own AS centers, Xiaomi provides after-sales service at only 14 locations nationwide through ServiceN, a subsidiary of the outsourcing company SK Networks Service. This cannot compete with Samsung Electronics, which has 170 AS centers just for smartphones, or Apple, which operates more than 80 directly managed repair shops.

Strengthening after-sales service is a hurdle Xiaomi must overcome to survive in Korea, where consumer expectations for products are high. In other words, after already earning recognition for value for money, after-sales service could become Xiaomi's hidden weapon to disrupt Korean companies. Backed by strong capital, Xiaomi is now prioritizing after-sales service expansion as it opens stores in Korea.

Korea must prepare for the possibility that Xiaomi could become a game-changer, transforming the image of Chinese-made products. If Chinese companies that have already established a reputation for value for money among Korean consumers succeed in improving durability and after-sales service, backed by technology and capital, the industry must be ready for seismic changes. Even the biggest challenge facing Chinese car brands like BYD, which have entered the Korean market?the negative perception of "Made in China"?could begin to crack.

This could be the moment when Korean companies, which have maintained a competitive edge in premium markets such as smartphones, home appliances, and automobiles, find themselves at risk. It is time to reflect on statistics showing that the profit margins of leading companies in each sector have fallen by as much as 50 to 90 percent as Chinese companies expand their global market share.