A customer peruses the gear at a Xiaomi store in a Shanghai mall. Xiaomi’s smartphone models won early accolades for offering sleek designs at about half the price of comparable iPhones.
Photograph by Julie Glassberg for Fortune Magazine

And why Xiaomi will struggle to join them.

By Scott Cendrowski
June 24, 2016

In the business world, Chinese factories are famous for making inexpensive goods for foreign-owned companies. And Chinese companies are famous, in a less complimentary way, for making inexpensive near-imitations of more successful foreign brands.

That’s part of the challenge facing Xiaomi, the Chinese smartphone maker and internet company. The early success of its inexpensive, stylish smartphones with consumers in China helped it become one of the world’s most valuable private startups, with a $45 billion valuation. But as Fortune reports in a feature this week, Xiaomi’s lack of innovative products has held it back in its effort to become a global power. While Xiaomi currently gets about 9% of its sales overseas, distribution problems and intellectual property hurdles could make it hard to expand its global business.

So what could Xiaomi learn from the (relatively few) big Chinese companies that sell their own goods and services widely abroad? These five examples, all Fortune Global 500 members with at least $20 billion in revenue in 2015, offer a few clues. Among the lessons they impart: It helps if you’re selling something that people in foreign markets really need. And if you don’t have standout products of your own, sometimes the key to growth is to buy someone else’s.

(For more about Xiaomi and the challenges of building a global Chinese brand, read Can Xiaomi Live Up to Its $45 Billion Hype?, from this month’s issue of Fortune magazine.)

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