Xiaomi has clearly come a long way. From a mere start-up to going public, it has been quite a ride.
There have been occasional speed bumps, but, then that’s business as usual, as some would say. What’s important is that the company, has been able to come out of it, all the time. Stronger. And better. “Xiaomi’s achievements so far illustrate the strength and resilience of our model,” founder and CEO Lei Jun said while offering “ourselves to you as we prepare to enter a new stage in our journey.”
Xiaomi’s much-talked about Hong Kong IPO will possibly be one of the biggest the industry has ever seen. But that’s not what this is all about. It is about Xiaomi finally coming out to the world, and the world is now looking up to it. For innovation, but more importantly, the formula that makes Xiaomi click.
Xiaomi needs no introduction any more. Still, here are 10 things you probably did not know about the company.
1. Xiaomi sells everything under the sun, from neck pillows and ballpoint pens to air purifiers and smartphones. When asked about what kind of a company is Xiaomi, this is what founder and CEO Lei Jun had to say, “Xiaomi is a company that uses smartphones, smart hardware, smart IoT, as a base to be an internet company. We’re a new species. It’s a very different understanding from the traditional concept of a company. Pretty much every category that we enter, the key question is whether we can build an amazing product that touches people at half the price of what others are offering. Can we touch our consumers? We’re looking at it from a product angle. We’re also an e-commerce company.
Our product philosophy is amazing products at honest prices. This is something that we’ve been pursuing since the beginning.”
2. Xiaomi was founded in 2010, and on June 25, 2018 it went public in Hong Kong. Xiaomi’s Hong Kong Public Offering commenced on June 25, 1018 and is expected to close on June 28, 2018. The company is aiming to sell almost 2.2 billion shares for between 17 & 22 Hong Kong dollars each ($2.20-$2.80), hoping to raise more than $6 billion in the process. Trading is expected to commence on July 9, 2018.
3. Xiaomi employs a triathlon business model consisting of three key areas of focus: hardware, new retail and internet services.
4. Xiaomi offers a broad range of hardware products developed in-house or in collaboration with its ecosystem partners. It is currently investing in and managing an ecosystem of over 210 companies, among which more than 90 companies focus on the development of smart hardware and lifestyle products. Xiaomi further claims that it has built the world’s largest IoT platform with over 100 million connected devices, excluding smartphones and laptops, as of March 31, 2018.
5. Xiaomi employs both online (Mi.com) and offline (Mi Home stores) sales channels to sell its products. And it employs more or less the same strategies in global markets. In India, for instance, the company works through a three pronged strategy, that it calls O2O strategy (Online to Offline and vice versa), through which it helps direct traffic from its online channels such as Mi.com to its offline channels and then direct the traffic back to Mi.com from its offline stores.
6. It’s no secret that Xiaomi makes hardware just so it can sell (and make money from) its internet services. In March 2018, Xiaomi had approximately 190 million monthly active users on MIUI, its in-house Android-based operating system. As of March 31, 2018, over 1.4 million users had more than five connected Xiaomi products (excluding smartphones and laptops), it claims. The company, has only recently, ventured into India’s internet services market by bringing in Mi Music, Mi Video and Mi Credit to the country.
7. Every Xiaomi product, somehow, manages to break the record of value for money proposition by offering high-end specs at rock-bottom prices. When asked how is Xiaomi able to price its products so aggressively, this is what CEO Lei Jun had to say, “Our products are affordable not because they have low manufacturing cost. It’s because we integrate the whole value chain end-to-end and we optimise our efficiency to drive the cost down. A lot of our margins are always at above 1 or 2 per cent only. Sometimes when you have depreciation in currency or taxes increasing, we can come under a huge cost pressure. But the attitude that we want to express and keep telling others is that, in each value chain we want to make very thin margin. By optimising efficiency we can actually make great products and sell them very affordably. We are a very different company from others. A lot of the companies are always thinking how they can make their products even more expensive. Our goal is to provide the same kind of products at even more affordable prices. We’re not a luxury product company. This is a very unique point about us.
8. In line with its global strategy of selling its products at honest pricing, Xiaomi only recently announced that going forward, it will cap income from its hardware business at 5 per cent of after-tax profits. The Chinese brand is known to sell products at cost, or with a profit margin of 1 or 2 per cent, but, starting 2018, it will limit income from its consumer hardware products after-tax profits to 5 per cent at max. The five per cent cap will not apply to chipsets and microprocessors that it makes in-house. The announcement to cap profit margins to as low as 5 per cent, and returning the excess to users, is another classic Xiaomi move, as some would say. Many would say such a business model can’t be sustainable. Xiaomi thinks differently though. “Aiming for large volumes with small profit margins will still result in suitable hardware profits for us in the long term,” CEO Lei Jun said. But it’s the next line, that wins hearts really. “If we sell our products at close to cost and return value to our users, then we can earn the long-term support of our users.”
9. Xiaomi’s success story is no secret anymore. The company exceeded the revenue goal of RMB 100 billion in a little over seven years, something that took Apple 20 years, Facebook 12 years, and Google nine years. Xiaomi is present in 74 countries and regions as of March 31, 2018. It ranked number one in India in terms of smartphone unit shipments in the first quarter of 2018 and was also the top five in 15 markets, according to IDC.
10. Xiaomi CEO Lei Jun, who has never received a bonus in the past, has been awarded $1.5 billion worth of stock by the company ahead of going public in Hong Kong. Xiaomi’s IPO, besides making the company’s co-founders super rich, is also likely to bring lots of rewards for early bird investors. The IPO is likley to raise millions for Xiaomi’s 56 employees and the company’s India head (and also Xiaomi’s vice president for global) Manu Jain who is likely to become a millionaire post the Public Offering.
News credit : Indiatoday