He is a big name in Chinese Tech Circle. He built a mobile-phone brand up from scratch and take it to Market Capitalization $US 45 Billion in 5 years. He once pleaded that his start-up will not do IPO in ﬁ ve years and last month, Lei Jun’s Xiaomi lodged the World’s biggest IPO since 2014 in HK. Yes, the legendary Chinese tech ﬁ rm Xiaomi just opened to the investors around the world.
Lei Jun cofounded and chairs Xiaomi, a privately-held ﬁ rm that is one of the largest Chinese smartphone makers. Xiaomi once led China’s smartphone market, but lost market share amid ﬁ erce competition from rivals Oppo and Huawei. The departure of Hugo Barra as Xiaomi’s point man for international sales in January 2017 was a setback to its overseas business. Lei has investments in Chinese social gaming company YY and Hong Kong-listed software ﬁ rm Kingsoft.
The Rise of Chinese Apple
Xiaomi Inc. (Chinese: 小米) is a Chinese electronics and software company headquartered in Beijing. It designs, develops, and sells smartphones, mobile apps, laptops and related consumer electronics.
Xiaomi released its ﬁ rst smartphone in August 2011 and has rapidly gained market share in China to become China’s largest smartphone company in 2014. As of 2017 Xiaomi was the world’s 5th largest smartphone company. It has expanded into developing a wider range of consumer electronics, including a smart home (IoT) device ecosystem.
There is an interesting fact that Xiaomi has been compared to the American corporation Apple Inc., as reviewers found some of Xiaomi’s phones and tablets similar in appearance to Apple’s. In addition, the marketing strategy of Xiaomi is at times described as riding on the back of the “cult of Apple”. It is reported that, after reading a book about Steve Jobs in college, Xiaomi’s chairman and CEO, Lei Jun, carefully cultivated a Steve Jobs image, including jeans, dark shirts, and Jobs’ announcement style at Xiaomi’s earlier product announcements.
Others point out that while there are similarities to Apple, the ability to customize the software based upon user preferences using Google’s Android operating system sets Xiaomi apart.
During the Mi 4 unveiling conference in 2014, the presentation slides used Apple’s iconic “One more thing…” slide before introducing the Mi Band; it was the only English language slide in the whole presentation.
Xiaomi has been also known for their hunger marketing tactics, which Apple also uses. “Sold out in just 50 seconds!” This comment is what an article said when Xiaomi released their latest smart phone, Mi Note 2, and it made more people focus on their new product. When Xiaomi releases new products, they make the shortest time record every time they sold out the latest item. Their new products are only available for purchase on their official website, people who pre-registered could get a chance to make a purchase.
When it raised money in late 2014, Xiaomi was valued at $US 45 billion (AUD 59.6 billion). After a challenging few years that saw a decline in smartphone sales, Xiaomi doubled down on offline retail with the opening of more than 200 Apple-style retail stores across China while also branching into a wide product range of dirt-cheap internet-connected devices. It now sells everything from smartphones and fitness trackers to rice cookers and suitcases.
Xiaomi has also steadily expanded its overseas market—less than half of its phone shipments in the first quarter of this year were domestic, according to research firm IDC. The company has grown to become the world’s fourth-biggest smartphone brand in both market share and shipments by focusing heavily on India, its second-largest market behind China, according to IDC.
In the last quarter of 2017, the firm said that Xiaomi was ahead of Samsung in India in terms of market share. Xiaomi was India’s largest smartphone maker with a 31.1% share, followed by Samsung at 26.2% in the quarter ended March, according to Hong Kong-based Counterpoint Technology Market Research.
The Chinese company is the largest online smartphone brand in India with a 57% share, followed by Samsung (9%), Motorola (8.9%), Lenovo (4%) and Apple (3.4%), it said, citing International Data Corp. research for October-December 2017.
The company says it sells its products in 74 countries and regions. It has enjoyed particularly rapid growth in India, where it has overtaken Samsung (SSNLF) as the biggest selling smartphone maker.
In the ﬁ rst two quarters of 2018, Xiaomi provided the only bright spot among the top 10 smartphone vendors, recording triple-digit percentage growth this quarter (116%). “Xiaomi has done an excellent job recovering its position in its home market,” said Canalys Senior Director Nicole Peng. “While China has been a growth engine and proﬁ t driver for Xiaomi’s rising service revenue, overseas market expansion
has helped it boost market share, both of which will be critical to the success of its IPO.” Of Xiaomi’s 28.1 million shipments in Q1, close to 57% shipped outside of China. “It is important to note that Xiaomi’s rapid expansion will bring with it substantial overheads, which will make sustaining its original lightweight cost structure increasingly difﬁ cult.”
Xiaomi has 15,000 employees in China, India, Malaysia, Singapore and is expanding to other countries such as Indonesia, the Philippines and South Africa. Lei Jun, the founder and CEO, has an estimated net worth of US$6.8 billion. He is China’s 24th richest person in 2017.
The Biggest IPO In Three Years
Xiaomi, one of the world’s leading smartphone makers, has ﬁ led to go public in Hong Kong in what could be the biggest IPO in nearly four years.
The Chinese company submitted documents on 3 May 2018 to list shares on the Hong Kong stock exchange. Its ﬁ ling didn’t give details on the size of the planned IPO, but reports have suggested it could be worth around $10 billion.
Some recent reports have suggested the IPO could put its valuation around $100 billion, but a person familiar with the company’s plans to go public told media that it would be lower than that.
A deal of that size would make it the biggest stock market listing since Alibaba (BABA) went public in September 2014, according to Dealogic.
However, it is a sensitive time to go public, especially for Chinese tech companies.US ofﬁ cials have warned Americans against buying smartphones from two other big Chinese ﬁ rms, Huawei and ZTE, saying they pose a security risk.
Chinese tech companies have also found themselves caught up in a trade dispute between Washington and Beijing.
Xiaomi acknowledges that a trade war could be a risk for investors. In its ﬁ ling Thursday, the company said that in the event of trade or import protection policies, “our business and operations may be adversely affected.”
(Content Edited from CNNMoney, Forbes, Sina, Canalys, The Economic Times, Wikipedia)