Xiaomi Technology ranked first in smartphone shipments in the China market among China-based vendors in the first half of 2014, but will see growth in shipments gradually slow down mainly because other vendors started using online marketing in the second quarter and have launched or will launch models with high performance-price ratios for sale at CNY799-999 (US$129-161), according to Digitimes Research.

Hongmi and Xiaomi smartphones both use MIUI operating system, so consumers feel no difference in terms of usage experience and prefer Hongmi, which is cheaper, as a result. This will cause an imbalance in Xiaomi's high-end and entry-level smartphone shipments.

With other China-based smartphone vendors also joining the online channel competition in the second quarter and pricing their models at CNY799-999, Xiaomi will maintain its shipments in the short terms because of its strong brand recognition, but will see its shipments weakening in the long term as their products all share similar specificitons, added Digitimes Research.