In less than a year, smartphone manufacturer Xiaomi has gone from near-obscurity to the dominant power in China. An August 6 report released by research company Calanlys details how in the second quarter the Beijing-based vendor captured 14% of the Chinese market, which translates to a whopping 15 million smartphones. The ascendant company now stands at the fifth largest smartphone vendor in the world, landing just behind global luminaries Samsung, Apple, Lenovo, and Huawei.

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"This is a phenomenal achievement for Xiaomi," said Shanghai-based Canalys Research Analyst Jingwen Wang in the report. "Undoubtedly this was helped by an anticipated, temporarily under-strength Samsung performance during the quarter." 

Wang refers to a fundamental shift in China's purchasing habits. Samsung's slip to second in the Chinese smartphone market, the largest in the world, is indicative of China's embrace of 4G handsets, helped by an ongoing push from China Mobile of its 4G services. As the South Korean giant realigns its strategy and inventories, more nimble companies made their move. 

Apple, while still trailing Samsung in China, still saw a strong year-on-year performance, up 58%, helped by the iPhone's position as a luxury device for consumers looking to use 4G services from China Mobile. Conversely, the bargain-basement prices and online-sales only tactics favored by Xiaomi proved instrumental in unit sales; personifying new economic models, the actual phones themselves are so cheap, around $130, that they do not constitute a notable income flow. Rather, Xiaomi attained its success through apps and add-ons.

But the same report also issues caution for investors: For all Xiaomi's positives, the fact remains that 97% of its sales remain restricted to China. It is all but unknown anywhere else. While the company plans to enter Indonesia, Mexico, Russia, Thailand, and Turkey by the end of this year, Xiaomi will undoubtedly find the international market landscape trickier to navigate than it did its own backyard.

"Its aggressive pricing model will certainly resonate beyond China, but the challenge it faces in scaling its model for success on a global stage should not be underestimated," said Singapore-based Analyst Jessica Kwee.

That is market-speak for the notoriously hard to crack American market. Nokia achieved worldwide success but remains a minor player in the United States, and despite its skid in China, Samsung still leads the world with a 26% market share. Even better, it pushed off Apple as the leading vendor with a 36% share (compared to Apple's 26%) as iPhone loyalists put a break on spending in anticipation for the release of the iPhone 6 slated for late 2014. According to Forbes, the two monoliths control a combined 69% of the US market, and points out that other online-only sales campaigns, such as that of Google, fell flat.

If Xiaomi enters the fray, it will not only face one of the most competitive markets on the planet, but will do so with almost no brand recognition. 

"That said," observes Kwee, "Xiaomi does have the potential to be a disruptive force beyond China and international vendors should take note." 

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