The Rise of Xiaomi

The Chinese smartphone maker Xiaomi is setting itself up to take on the world market after achieving a sizeable market share in South-East Asia. Xiaomi has the second largest market share in China next only to Apple. Xiaomi largest market, outside of China, is India.


The ambitious CEO, Mr. Jun Lei is never short of saying – “Apple and Samsung are gone” – mark his confidence! “Even a pig can fly if it stands at the center of a whirlwind,” he says. After several years in semiretirement, “one day I woke up and thought, ‘I’m already 40 and I’ve achieved nothing,” he says. “I had a dream when I was young to found a global, first-rate company.”

In April 2010, he founded Xiaomi with Bin Lin, a former Google and Microsoft executive. The name means “millet,” a Chinese staple that is nutritious but inexpensive. While consumers in China at the time could buy expensive foreign smartphones or cheap Chinese knockoffs, there was a void between that Mr. Lei decided to target. Xiaomi sells its high end 64 GB Mi Note Pro at $489 in China vis-à-vis Apple which sells iPhone 6 at $950, while Samsung sells Galaxy S6 at around $800. According to users, Xiaomi phone provide value for money.

Xiaomi is one of the most valued startups in the world. Privately held, experts put its valuation at $46 billion. Xiaomi though still a disorganized startup. It does not have the inventory of patents like its rivals – Apple and Samsung. Experts put Xiaomi employee count at 8,000 and that it has a very flat work culture for a start-up. Employees frequently cite Xiaomi’s egalitarian management structure, in which even junior employees meet with vice presidents and each department has high autonomy. “The flat management is one of the great things about Xiaomi,” says one former employee. “Everything operates on trust.”
Xiaomi keeps the marketing cost low by spending largely on cultivating a fan base instead of advertisements. It holds fan parties every few weeks in a different city, where executives meet enthusiasts and give gifts. It has an army of employees to interact with consumers on social media. Xiaomi sells the majority of its phones online, where prices don’t need to include a profit margin for retailers.

Xiaomi’s big test would be now when it’s making a foray into foreign markets – where regulations and consumer preferences are different. For example, in India, still a large section of the customer prefer purchasing their mobile devices from brick and mortar stores where they can touch and feel the device before buying it. Xiaomi has hired former Google executive Hugo Barra as global vice president to assist them with foreign market entry strategy. Let’s see how Xiaomi performs across the world!