Above all, we are seeing Xiaomi’s highly unique business model really reaping the benefits. Well-documented to cut down on traditional costs for marketing (which they do with largely social-media), software development (made cheaper with the adoption of Android), and distribution (where they sidestep physical stores in favor of their web store), Xiaomi truly “steam-rolls” with their commitment towards accessory sales and software services as their main profit sources. As an example, Xiaomi 10400 mAH powerbank actually matches the premium quality of their phones and sells tons at their trademark low prices, en route to profitability. They have built such a reputation on accessories alone that breaking into the United States selling only powerbanks and other assortments looks like a confident initiative rather than a desperate one.
Also, don’t forget the well-documented method of selling flagship phones for overblown life cycles of 18 months as opposed to just 6 or even less. Pronounced economic principles are winning out these days