Xiaomi: The Popular Chinese Electronics Company

Dear Readers

In the ever-evolving tech industry, few brands have made an impact as swiftly and significantly as Xiaomi. From its humble beginnings as a software company in 2010 to becoming one of the world’s largest smartphone manufacturers, Xiaomi has redefined the way technology companies operate. With a unique business model, aggressive pricing strategies, and an unwavering focus on customer satisfaction, Xiaomi’s story is a testament to the power of innovation and adaptability.

In this issue of Business Bulletin, we’ll dive deep into the Xiaomi case study to uncover how the brand disrupted the global market, the strategies behind its success, and the lessons entrepreneurs can learn from its journey.

About Xiaomi

Xiaomi is an electronics company based in Beijing, China. It was founded by Lei Jun in April 2010, and in 2014, Xiaomi was the largest smartphone company in China. Today, Xiaomi is one of the top five smartphone vendors in the world. The smartphone commodities of Xiaomi include different series such as Mi Series, Mi Note Series, Mi Max Series, Mi Mix Series, Mi NoteBook Series, Redmi Series (Redmi 9, Redmi 8, Redmi 9i, Redmi 9a), Blackshark, and Pocophone. Xiaomi has around 291.6 million active users for its MIUI updates. Besides, the company also offers laptops, mobile apps, mobile accessories, wearables, home appliances, and smart-home devices.

In 2019, Xiaomi even started selling accessories such as caps, bags, glasses, backpacks, and also lunchboxes, pillows, cups, filters, umbrellas, and screwdrivers.

In 2018, Xiaomi launched Mi Credit in India for easy accessibility of personal loans. The Xiaomi company also offers various value-added-internet services like 'Mi Music', 'Mi Video', and 'Mi Game'.

Xiaomi - Founders/Owners

Lei Jun: Lei Jun joined Kingsoft, a Chinese software company as an engineer. In 1998, Lei Jun became the CEO of Kingsoft. In December 2007, he resigned from Kingsoft for health-related issues. While he was still working with Kingsoft, Lei Junfounded an online bookstore named Joyo.com. Joyo.com was acquired by Amazon.com in 2004.

After resigning from Kingsoft, Lei Jun became an angel investor and invested in over 20 companies. He still invests in various companies through Shunwei Capital. In 2008, he joined UC Web as Chairman, and in 2010 Lei Jun founded Xiaomi.

The other co-founders are Lin Bin, Dr. Zhou Guangping, Liu De, Li Wanqiang, Wong Kong-Kat, Hong Feng, and Chuan Wang.

Xiaomi - History

Lei Jun founded Xiaomi in 2010, as a software company and created MIUI ROM based on Google's Android. The idea behind developing MIUI was to offer more functionalities and a better UI than Android. MIUI indeed got the popularity it deserved. As per reports in March 2020, the MAU ( Monthly Active Users) of MIUI increased to 330.7 million worldwide.

In 2011 Xiaomi entered the hardware segment by launching the Mi One phone. The Xiaomi team's focus has been on creating quality hardware devices and selling them at comparatively lower costs than those available in the market while they intended to make revenue through their services and content. The company today not only sells mobile phones but more mobile apps, wearables, home appliances, and smart home devices.

Xiaomi has raised funding worth approx. $7.4 Billion over 15 different funding rounds. Xiaomi went public in 2018.

Xiaomi - Revenue Model

Xiaomi’s primary source of revenue is from smartphones, the Internet of Things (IoT) and lifestyle products, internet services, and other miscellaneous products and services that the company offers.

A major portion of Xiaomi's revenue comes from the sale of smartphones. In 2018, the company is reported to have sold 119 million smartphones. Around 25% of Xiaomi's revenue comes from IoT and Lifestyle products. The company deals in a wide variety of IoT-enabled products like smart TVs, electric scooters, vacuum cleaners, cameras, rearview mirrors, etc. As regards the internet-based services provided by the company, pre-loaded apps and services form a good part of Xiaomi's revenue. Besides the company offers monthly subscriptions to its TV shows, games, and movies, and also earns by providing advertisement services.

Xiaomi - Growth & Revenue

In the third quarter of 2024, Xiaomi achieved record revenue and strong earnings growth. Total revenue for the quarter reached RMB92.5 billion, marking a 30.5% year-over-year increase.

However, due to the Coronavirus pandemic, the smartphone company saw a decline in the Q1 of 2020. However, Xiaomi has also been declared as the only brand among the top five smartphone sellers, to achieve comparatively sound sales in the first quarter of 2020.

Xiaomi - Future Plans

Xiaomi has ambitious future plans:

• Market Expansion: Xiaomi aims to open 2 more stores in Singapore by 2025, reaching 10 stores, and expand to 219 sales stores and 143 service centers by 2024.

• R&D Investment: The company plans to invest 30 billion yuan (US$4.1 billion) in 2025, focusing on AI, operating systems, and chips.

• Electric Vehicles (EVs): Xiaomi is developing smart EVs with advanced features, though it currently faces net losses despite a strong profit margin.

• Carbon Neutrality: Xiaomi targets carbon neutrality by 2040 and will transport 2.32 million products via sea and rail in 2022 to cut emissions.

• Smart Device Ecosystem: Xiaomi is dedicated to creating a connected world of smart devices.

Xiaomi’s vision is to make quality technology accessible to everyone, i.e., “Innovation for everyone”. The company makes this possible with its high-quality products and remarkable services.

Challenges Faced by Xiaomi