Key to Xiaomi's success in Brazil: Global VP

This will make our business model fly: Xiaomi VP
This will make our business model fly: Xiaomi VP

As Chinese smartphone maker Xiaomi makes its way into the Americas, its success will rest on how effectively it can duplicate its direct-selling business model outside of China, the company's Global Vice President Hugo Barra said Wednesday.

"Direct-selling model makes a huge difference considering how expensive the margins are if you sell through normal retail, which is typically how smartphones are traditionally sold in Brazil," Barra said in a CNBC "Squawk Alley" interview.

On Tuesday, Xiaomi said it had started manufacturing mobile devices in Brazil and would start selling the Redmi 2 at a starting price of about $160 next week. Brazil will be the first country outside of Asia where Xiaomi devices will be sold.

"Brazil is, for us, a stepping stone into the rest of Latin America. We're running Latin America from Brazil and, of course, we're very focused, so we're concentrating on Brazil before we go any further," Barra added.

Read More Why Xiaomi phones won't be on US shelves soon

Xiaomi has been on the fast-track to success after increasing its value to about $5 billion in just three years, according to Reuters.

—Reuters contributed to this report.