Lead: On May 3rd, Xiaomi Group submitted a prospectus to the Hong Kong Stock Exchange. Xiaomi is expected to set a record for the world's largest IPO this year. Recently, Bloomberg published an article to reveal the development history of Xiaomi and Lei Jun’s entrepreneurial spirit. Millet's international future.
The following is the main content of the article:
In the underground floor of Beijing Wucaicheng Shopping Center, hundreds of people are shopping, having dinner with their families, and reveling on Saturday nights as before. On the fifteenth floor above, the headquarter of the Chinese smartphone maker Xiaomi is still Starting conditions. Under the harsh fluorescent light, employees wearing bright orange badges shuttled back and forth through the turnstiles, and the weekends seemed to have nothing to do with them. In the small office, CEO Lei Jun kneels at a black wooden table. , is preparing for the twelfth meeting of the day.
It was one night in March. It was Lei Jun’s first office trip to the office within a month. According to the usual practice, he should have traveled to India during this time. But last week, he had just circumnavigated in mainland China and Hong Kong. The bankers are preparing an eight-year-old start-up company, Xiaomi, to prepare for listing, and is expected to achieve the world's largest initial public offering (IPO) this year. In early May, Xiaomi submitted an IPO document in Hong Kong, although it was not disclosed. Plans to raise the scale, but with a valuation of up to $100 billion in assets, Xiaomi may become the largest IPO dark horse after China’s technology giant Alibaba shocked the world in 2014. Last year, Xiaomi’s sales amounted to RMB 114.6 billion (approximately (18 billion US dollars), an increase of 67% over 2016, operating profit of 1.9 billion US dollars. From a Chinese smart phone leader a few years ago to today to win an impressive market share, Xiaomi has come a long way.
After operating Kingsoft Corp. and selling Joyo.com to Amazon, Lei Jun founded Xiaomi. He said that he himself is not interested in the money Xiaomi has earned; he is more interested in what money means - Xiaomi joins. To the ranks of China's so-called national champion companies, along with Ma Yun's Alibaba, Ma Huateng's Tencent, and Robin Li's Baidu. "I want to lead a Chinese company," said 48-year-old Lei Jun, 'become the world's number one.'
Lei Jun is a finicky CEO, his micro-management has reached the level that may make Jeff Bezos awkward. Lei Jun obsessed with the pixel size of the mobile phone screen and a variety of colors of millet AA batteries, hate to see the empty The water bottle was messed up on the desk, and the co-founder had long been used to adjusting his font size in PowerPoint presentations. 'Our eight people can be called co-founders, but the actual structure is one plus seven,' Director Liu De said. Lei Jun also contributed to the planning of Xiaomi's new headquarters - the urinal in the men's bathroom was personally selected by him.
The park is a 10-minute drive from the shopping mall and will become Xiaomi’s new home later this year. This glass and steel fortress is a testament to Lei Jun’s ambition and marks his reinstalling. Xiaomi’s investor Robin Chen ( Robin Chan said that at the moment, Lei Jun is already close to building a Chinese Internet giant enough to be equal to Ma Yun. He is determined to live up to expectations. 'Lei Jun feels as smart as Ma Yun, richer in experience and more redoubled his efforts,' said Mr. Chen. However, he was never considered to be one of them. At the age of 40, Lei Jun thought that Xiaomi would be his killer.
In the early days, Xiaomi sold its latest processor and smartphone as its business features, priced at half the price of competing devices. Relying on online sales and fans’ pursuit, despite no physical store support, Xiaomi’s company had Occupy the Chinese market, becoming the third largest mobile phone manufacturer in the world after Apple and Samsung Electronics.
At that time, Xiaomi’s own positioning was Google’s advertising and service company, not Apple’s hardware player. In 2014, the company’s assets were valued at US$46 billion and raised US$1.1 billion in venture capital. Somehow, Xiaomi became the world. The most valuable startup company (Uber later stole this crown).
"This valuation figure eventually became a curse," Lei Jun said. He lamented that venture capital made Xiaomi a target for public opinion. Local brands OPPO, Vivo and Huawei have established physical stores, which account for 85% of the Chinese smartphone market, and their product prices. It is similar to Xiaomi's mobile phone. On the Internet, Huawei's glorious brand duplicates Xiaomi's sales model. At the same time, as of 2016, Xiaomi’s mobile phone production has been unsmooth, and customers’ desire to purchase has been hit, and they have been constantly declining. In support of competitive companies, according to statistics from International Data Corporation, in early 2016, Xiaomi, who once dominated the Chinese smartphone market, slipped to the fifth place in the rankings and ranked seventh in the world. 'The design of our supply chain Unable to cope with this growth,' said Xiaowan co-founder Li Wanqiang. 'The small problem suddenly became a big problem.'
In May 2016, Lei Jun asked another co-founder to leave the role of supply chain supervisor and assume this role. Lei Jun and Xiaomi’s employees accounted for 60% of the shares. He personally negotiated with Foxconn, Samsung and other suppliers. To ensure that millet does not have to wait for parts and keep stable production.
Li Wanqiang said that throughout 2016, they all worked overtime until late at night, accompanied by beer, skewers and cigarettes until dawn. Analysts’ interest in Xiaomi is not exaggerated. Xiaomi relies on loans rather than venture capital, which may reduce Market valuation of the company. 'I pray for Xiaomi,' said Ji Ji, who in 2014 was the chief investment officer of the All-Star Investment Corporation who led the project. 'I still have confidence, but no one can imagine growth.' Slowing down, it made us all unprepared. 'In order to solve the problem, Xiaomi must 'strive, or retreat,' Lei Jun said. 'We chose to do more.'
Xiaomi began selling not only mobile phones. Through venture capital, Xiaomi acquired shares of hundreds of startup companies. Thousands of engineers have developed music, video, and browser applications on their customized Android operating system, MIUI. Millet-branded scooters, chargers, air purifiers and suitcases, as well as video streaming applications and cloud storage have emerged. The company sells more than 500 products and services to 190 million users each month in 70 countries.
Xiaomi established hundreds of physical stores to sell all new equipment and mobile phones, mainly targeting the Chinese and Indian markets. The company has curtailed its business elsewhere, focusing on India, targeting the country’s first customers to purchase mobile phones and tailoring them to them. For example, at a distance of 50 miles from Bangalore, Lei Jun and the company’s Indian director Manu Jain went to a village to investigate customers and retailers, and learned of a situation where local people can hardly predict which operation. Businesses offer faster Internet on certain days. To do this, they have specially designed two SIM card slots for the next handset so that customers can easily switch from one operator to another.
Market Share of Major Mobile Brands in India (Purple is Xiaomi)
Xiaomi also invested heavily in Mi MIX. This is Xiaomi’s first high-end mobile phone that can compete with Apple, Samsung, and Huawei’s new flagship. At the end of 2016, Lei Jun made a decision to set the price of this mobile phone at 3,999 yuan. The opponent was one-third lower. On the morning of the release of Mi MIX, Lei Jun rehearsed in front of the slide, rehearsal 5 to 10 times per slide, and finally made such a decision. Although Mi MIX sales are not high, But it convinces critics that Xiaomi has strong technology and can compete with bigger competitors.
For Xiaomi executives, the company's strategy is somewhat similar to that of the US retailer Costco. The good market sells ketchup and Diet Coke at discounted prices, not for profit, but for customers. How do they make money? Good City charges members more, and sells other services such as tour packages. Millet’s revenue is 70% from mobile phones, and Counterpoint Research believes that Millet only makes US$2 per mobile phone. Apple makes US$250 per mobile phone. Samsung earned $19. In addition, Xiaomi’s 20% revenue comes from air purifiers, scooters, rice cookers and other products. In April, Xiao Zeng claimed that the profitability of mobile phones and other equipment will never exceed 5%. , Millet still has 10% of its revenue from pre-installed apps and services. The profit margin of this business is 45-60%. As such, Xiaomi's profit margin is at least about the same as that of Samsung.
Some millet ecological chain products
Several major businesses formed a combination boxing to promote the rapid growth of Xiaomi. In July 2017, Lei Jun sent a letter to employees. He said in the letter: 'After two years of adjustment, Xiaomi has resumed rapid growth!' At that time, after reaching sales targets, Lei Jundai The employees celebrated at the cafeteria. By the end of 2017, Xiaomi had beaten Samsung in the Indian market to become the first place. India has surpassed the United States to become the world’s second largest smartphone market, second only to China. Another new year arrived, Lei Jun also Determined to quit smoking.
Xiaomi is now the world’s fourth-largest mobile phone maker and Huawei ranks third. In February, at the company’s celebration, Lei Jun pledged that Xiaomi will become China’s largest mobile phone maker within 10 quarters. However, in the Chinese technology industry, Two and a half years is not short. If you want to gain more market share, it is not enough to rely on price wars and marketing.
Canalys analyst Jia Mo (transliteration) believes that Lei Jun’s company has no way to get rid of dependence on China, and 58% of Xiaomi’s mobile phone sales come from China. This is a serious problem because the Chinese market is getting saturated. Last year, China The decline in smartphone sales for the first time. The low price of millet phones can indeed attract many people who bought mobile phones for the first time, but when consumers buy a third or fourth mobile phone, they will turn to Apple and Huawei. Xiaomi has not yet proved to the world. , Its scooters and other products can attract customers to buy millet mobile phones and online services. Jame said: 'If millet in China can not continue to maintain growth, the capital and global expansion may encounter big trouble.'
Jay Mills, India’s director, knows that before new customers use Xiaomi’s Internet services, the team still has a lot of work to do. MIUI’s global users contribute $1.9 billion in revenue each year, which is equivalent to US$10 per user per year from millet. Netflix gets $100 a year from users and Spotify is about $32. Millet declined to comment on average revenue per user.
Counterpoint Research analyst Neil Shah believes that in other markets outside of China, Xiaomi is going to be even more difficult every time. Shaha also said that Xiaomi ventured into the U.S. and European markets and caused patent costs to rise. It was disclosed to the outside world that it invested many resources in intellectual property.
Lei Jun said: 'I am convinced that no country will reject Xiaomi's products. ' Indeed, Huawei, ZTE has such problems in the United States. Xiaomi does not have the same problems as Huawei and ZTE, such as not producing sensitive communications equipment. However, Xiaomi and U.S. operators lack contact and are alienated from the U.S. customer base (they favor Apple).
In the interview, Lei Jun did not want to talk about sensitive issues. He turned the topic to another thing: Ballpoint pen. He took out two white boxes filled with ballpoint pens designed by Xiaomi. Lei Jun hopes that the reporters will use the ballet pens written by Xiaomi. Lei Jun criticized the inferior pens. He said Xiaomi's pen was only 9.9 yuan, which was very comfortable in his hand.
A week ago, the Mi MIX 2S mobile phone was released in Shanghai. Lei Jun walked onto the podium in white sneakers and blue jeans. In a two-hour speech, Lei Jun compared iPhone X 23 times. He told 3,000 listeners, said Millet is not only beyond the iPhone X, it is simply rolling.
Lei Jun said that he hopes to create the best image of the world for Xiaomi, rather than stand out from the OPPO, vivo and other companies in the domestic market. Lei Jun said: 'If we can do better than Apple, then the market value of Xiaomi can be achieved. 1 trillion US dollars. '
Then, when the sun goes down and the lights of the nearby building light up, Lei Jun said that some day he may spend more time skiing with friends and drinking coffee. His eyes stayed for a moment before he returned to reality.