case study of XIAOMI

Case Study of Xiaomi Inc.

1.Introduction

1.1Background of mobile phones’ development trend

With the development of information technology and the widely use of the Internet, the development patterns of every person and every industry have been changed, especially it promoted the development of mobile phones, which is one of the fastest-growing industries in the world. According to the smartphone development trend report of China (2011), in 2011, the smartphone users in China has been exceed 930 million, and annual growth rate is 8%. Smartphone presents the fierce growth trend that the penetration rate of urban residents has reached 35%. Due to the major manufactures and operators promote and popularise smartphones, the domestic smartphone scale has expanded. Since the launch of iPhone by Apple in 2007, the pattern of smartphone market began to innovate. By the first quarter of 2011, with the four generation iPhone products, Apple’s market share has reached 16.8%, becoming the third major operating system in the world. (Growns News, 2011) China has rapidly increased to the second largest market of Apple. Apple Inc. has made such a great success that the manufactures see the unlimited business opportunities of smartphone market to publish a verities of different types of smartphone with diverse performance. Alibaba, the e-commerce giant, has just launched the ‘cloud mobile phone’, while Tencent, Baidu and other Internet giants are actively promoting a mobile Internet development plan for the smartphone. And the major mobile phone manufactures in China have introduced a variety of middle-range smartphone. At the same time, Lei Jun also grasped the opportunity to research and invent smartphones by establishing a ‘mobile Internet’ company, Xiaomi Inc. in 2010.

1.2Xiaomi Inc.

Xiaomi Inc., one of China's largest technology companies, was established in 2010 by

entrepreneur Lei Jun and his partners, and had been the third best-selling smartphone maker in the world. Lei Jun had gathered talented people from Google, Kingsoft, Microsoft, Motorola, Yahoo, and other Internet and tech companies from around the world to invent and develop new products. (Mi Global, 2015). The registered capital is 5000 million RMB, and the type of Xiaomi Inc. is limited liability company. ‘Only for fans’ slogan is business philosophy. ‘Xiaomi Inc. creates remarkable hardware, software, and Internet services for – and with the help of – our Mi fans’ (Mi Global, 2015). Xiaomi Inc. pioneered a new model that develop the mobile phone operating system by the Internet with improving by fans. The design of smartphone is all done by Xiaomi team, which includes many senior professional designers. Xiaomi mobile phone is China’s first dual core and high performance smartphone that is independently developed by Xiaomi Inc. And the official network is the only official sales channel. Xiaomi smartphones not only sold well in the mainland of China, but also launched in Taiwan, Hong Kong, Singapore, Malaysia, India and Indonesia. They have sold 61.12 million smartphones in 2014. (Mundy, 2015)

1.3Lei Jun

Lei Jun founded Xiaomi Inc. that company size and the speed of development let people unexpected. He is not only the chairman and CEO of Xiaomi Inc., but also the president of soft maker Kingsoft from 2011, and the chairman of UCWeb, a leading Chinese browser maker. Lei Jun is also known as the famous angel investor in China. In 2012 he became the top 10 business leaders by China central television. In 2014, Lei Jun became Forbes Asia’s businessman, and first came into the Hurun rich list, global ranking 339th by 280 billion RMB. Table 1 shows that as an angel investor, he is committed to invest for four companies from 2010 to 2015.

Table 1: Investments by Lei Jun