Memo #339
By Grégoire-François Legault – gregoire.legault [at] alumni.ubc.ca
Increasingly, tech products will be “designed in China” as opposed to “made in China.” Xiaomi 小米, a Chinese consumer electronics manufacturer, represents a new era of innovation in China that will increasingly enable indigenous tech companies to compete head-to-head against established firms from the most advanced economies, just as Japanese firms did in the 1970s and 1980s. But unlike other tech companies obsessed with targeting mature markets first, Xiaomi is primarily interested in developing economies as well as its Asian neighbours.
Xiaomi celebrated its fifth anniversary on April 6, 2015 and established a new world record three days later by selling 2.11 million cellphones in 24 hours. Its valuation has already reached US$46 billion, making it one of the most successful private Chinese companies ever. Last year, Xiaomi shipped more than 70 million phones internationally, making it the biggest smartphone manufacturer in China and the fourth biggest internationally. The same year, Xiaomi filled 2,300 patent applications globally.
Xiaomi is now selling its products in India, Hong Kong, Taiwan, Malaysia, Indonesia, Singapore and the Philippines, and is developing a footprint in Brazil, Russia, Thailand, Vietnam, Turkey and Mexico. An expansion into Europe and North America is already in the works. The firm is thus betting that it can tap into a growing middle class around the world. Clearly, Xiaomi is a different type of beast than previous iterations of Chinese tech companies, almost all of them state-owned. And though Xiaomi has often been compared to Apple, this comparison fails to acknowledge its unique successes and diminishes its innovative genius.
Indeed, Xiaomi is more than a cellphone maker. On top of having developed its own interface and ecosystem, Xiaomi produces televisions, wearables, routers, headphones, electronic scales, air purifiers and even smart power bars and smart light bulbs. In addition, the Chinese firm has backed several other domestic start-ups, such as Ninebot, which recently acquired its American competitor Segway. Lei Jun, Xiaomi’s founder, has already come forward with plans to support one hundred more start-ups to replicate the company’s success and further develop the company’s ecosystem. This is not to mention Xiaomi’s mobile wallet service, which is currently being tested. Xiaomi has long passed the start-up tipping point. The bottom line is that ten years down the road, Xiaomi could very well be one of the world’s leading tech companies.
About the Author:
Grégoire Legault is a Master in Asia Pacific Policy Studies candidate at the University of British Columbia and a Fellow at the Institute of Asian Research. You can follow him on Twitter, connect with him on Linkedin or visit his photo blog.
Xiaomi recently opened an online store to sell accessories and start building a brand name in the West (Credit: Xiaomi).
Links
- Xiaolan Fu (2015), China’s Path to Innovation, Oxford University Press.
- Xiaomi: The Rise of An Indigenous Chinese Tech Industry, Asia Pacific Memo (December 2013)
- Eva Dou, “Xiaomi: The Secret to the World’s Most Valuable Startup,” Wall Street Journal (April 2015)
- James Griffiths, “Xiaomi enters US market with online accessories sale, but smartphones nowhere in sight,” South China Morning Post. (May 2015)
- Lei Jun to Invest in 100 Start-ups to Replicate Xiaomi’s Model (In Chinese), Sina Finance (April 2015)
- Yu-Feng Lin Lee, “When Google meets Xiaomi:. Comparative Case Study in Western and Eastern Corporate Management,” Journal of International Technology and Information Management 23:3-4 (2014): 75–90
- Mingzhi Li and Kai Reimers, “Innovation in China’s information and communications technology industry: Bottom up or top down?” Chinese Management Studies 9:1 (2015): 27–37
Related Memos:
See our other memos on China.