Xiaomi, the Beijing-based electronics company, has experienced the kind of rapid growth that most startups can only dream of. Founded in 2010, by Wuhan University graduate Lei Jun – now reputedly China’s 23rd richest person with an estimated wealth of almost $10 billion – the company enjoyed huge growth in its first half-decade. Just two years after its formation, the firm recorded sales of 7.2 million smartphones. This figure was dwarfed the following year, when Xiaomi sold almost 19 million of its phones. This kind of growth continued, with the company registering 61 million sales in 2014, and setting itself a target of 100 million in 2015.
After the initial years of explosive growth, 2015 didn’t quite live up to expectations – after initially revising its target to 80 million, the company eventually recorded just over 70 million sales for the year. While this still reflected a respectable growth, it was clear that the company’s explosive rise over the short-term would not be sustained. After a sustained campaign to improve its market position in India, it is thought that Xiaomi has yet again been able to grow, although the company has not yet released its final sales numbers.
Jun, who was named Businessman of the Year in 2014 by Forbes Asia, felt it was necessary to first address company staff about a shift in company strategy. A letter to employees made it clear that the days of exponential profit growth were over, and that it was necessary to look at the long-term opportunities for the company:
Our accomplishments are impressive, but the challenges we faced were unforgettable. In the first few years, we pushed ahead too fast. We created a miracle, but also drew on some long-term growth. So we have to slow down, further improve in some areas, and ensure sustainable growth for a long-term future.
Xiaomi started out as the first online retailer of smartphones, beating local competition in the forms of Huawei and Lenovo to the initial rewards of the emerging market. This strategy, however, left a huge retail gap open, which was promtly filled by OPPO and Vivo – companies which have focused their investment in retail stores in smaller and medium-sized cities across China and India. Jun’s letter seemed to indicate that Xiaomi’s future strategy will seek to rectify this:
E-commerce now makes up just over 10% of overall retail in China, and the online smartphone market only makes up 20% of the overall smartphone market. Xiaomi has great ambitions, and we are not satisfied with just being an e-commerce smartphone brand, so we have to upgrade our retail model, and incorporate offline retail for a new retail strategy.”
Jun has gone on to say that the company aims to open around 200 retail stores in 2017, increasing to 1000 by the start of 2020. This accompanies a revenue target of $14.5 billion, which it aims to achieve by focusing on AI, tech breakthroughs, further globalization and internet finance, in addition to its new retail strategy.