Published in FOCUS magazine.
Designer, developer, and retailer of smartphones, apps and consumer electronics, Xiaomi ranked third in Fast Company’s 2014 list of ‘Most Innovative Companies’ – the only Chinese organisation to make the cut. Now the largest smartphone maker on the Mainland and nicknamed the ‘Apple of China’, Xiaomi could be a game changer. The company’s success could prove China is a strong importer and exporter, a producer of low-cost, low-quality goods, and a developer of innovative, high quality products.
Xiaomi was founded in October 2011 and has been growing rapidly since. In the first half of 2013, the company’s revenue reached RMB 13.27 billion, totalling all of its sales in 2012 – when it grew 150 per cent. In August, the organisation received a valuation of US $10 billion after its most recent round of funding. To put this into perspective, it has already matched Lenovo’s market value and doubled that of Blackberry. Xiaomi’s rapid success comes from its strategy of social media-focused flash sales, constant user experience adaptation, and profits based on software instead of hardware. Using flash sales rather than relying on traditional new product rollout methods, Xiaomi increases hype and demand for its products.
The company sells phones in 200,000 to 300,000 limited quantity batches directly to consumers via Sina Weibo, China’s 400 million-member equivalent of Twitter. Most new product releases sell out within an hour, but the Redmi model vanished in 90 seconds, with more than US $7 million in pre-orders. These small quantities allow Xiaomi to better understand consumer interest in products before the company commits to larger production quantities. By year’s end, many believe Xiaomi will be a top-five client of Foxconn, a major high-volume technology manufacturer involved with Apple products as well.
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