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How Xiaomi broke out of China to go global | CNBC Reports


Xiaomi was started in 2010. Today, it’s one of the world’s
most popular smartphones. In India, it’s number one. So, I’ve come to its headquarters here in
Beijing to understand just how this company grew so rapidly and how it
can maintain its momentum. Xiaomi’s rise has been meteoric. Just nine years after it was founded
and one year after going public, the Chinese company became the youngest
member of the Fortune Global 500. The tech giant is best
known for its smartphones. It’s the world’s fourth most popular smartphone
maker, behind Samsung, Huawei and Apple. But Xiaomi doesn’t
just make phones. Walk into one of Xiaomi’s more than 1,000 global
stores, and you’ll find an array of different devices. Almost anything you can imagine,
they sell here in the Xiaomi store. I see virtual reality, walkie talkies, this device
translates languages, like Chinese to English, voice assistants and smart home
speakers, wearables and even tools. Did I mention they sell everything? Since its early days, Xiaomi’s founders
dreamed of an international footprint. And now, it’s one of a hand full of Chinese companies
who have managed to do what many couldn’t. It broke out of its home
market and went global. Xiaomi’s headcount has grown from about 100 in
2010 to a whopping 17,000 staff members today. This is company orientation where employees learn
about the corporate history and corporate culture before they begin in their roles, and just by
the looks of it, this is quite a lot of people. Its global headquarters in Beijing is
home to about 12,000 employees. I’ve come to Xiaomi’s brand-new headquarters
and it’s so new that you can still see them putting on the finishing touches around
the building and at the base of this lobby you actually see this,
it’s the Xiaomi store. The first thing that I think of when I see this
store, well, it reminds me of an Apple Store. We are different, we are very,
very different than Apple. Xiang Wang is Xiaomi’s Global Senior Vice President
and head of the company’s international business. Apple is a great company, they do
a lot of technology innovation. We are doing the same,
but our model is different. We want to sell as low as possible
instead of selling at a premium price. That business model originates from Xiaomi’s
founder, Chinese entrepreneur Lei Jun. Lei Jun’s vision was to create
a premium smartphone that could compete with the likes of Apple and
Samsung, but at a more affordable price. This allowed Xiaomi to tap into China’s
growing lower end smartphone market, and it wasn’t long before
it did the same abroad. Just look at this graph. In 2015, six percent of Xiaomi’s total revenues
came from outside Mainland China. By 2018, that grew to 40%. The aim? To eventually have half of its total revenue
coming from outside its borders. Xiaomi has achieved that by expanding
into more than 80 markets. but it’s India that is its biggest
overseas success story to date. It launched in the world’s second most populous
country in 2014 where it held flash sales to generate hype
around their phones. It worked. You only entered India
less than four years ago, and you’ve become the number one
smartphone maker, how did that happen? We offer very, very high-performance device,
with a very, very affordable price. Before us, if you want to buy this
smartphone, it was very, very expensive. Our model is to make the best
product but sell as low as possible. That helped Xiaomi pull ahead of Samsung to
become India’s top smartphone brand in 2018. While it still holds today, Chinese rival, BBK
Electronics, which backs Vivo, Oppo and Realme, could be challenging
Xiaomi’s market dominance. Outside of India and China, there’s
an additional 400 retail outlets, including locations in Dubai,
Barcelona, London and Mexico City. We opened our first store in Mexico
City and 4,000 people showed up. Wang argues Xiaomi’s fan culture is what helps set
the company apart from other low-cost competitors. From launch events to meet-ups
for gadget enthusiasts, there have been more than
1,000 Xiaomi fan events to date. Here you have an entire wall dedicated to
fans, things that fans have sent to Xiaomi. We always receive
many, many gifts. Normally they are
technology geeks. A boy and a girl, they met
during our fans event. So the couple in Indonesia met at a Xiaomi
event and named their child, Xiaomi. But the Chinese tech company has
had its share of challenges, too, from temporarily withdrawing from Brazil to losing a trademark case in Europe
against Apple over the name of its tablet. And of course there’s the elephant
in the room, the United States. Xiaomi has long-said it plans
to expand into the U.S. market, but those plans seem to be on hold
thanks to the U.S.-China trade war. U.S. President Donald Trump has openly
scrutinized Xiaomi’s home-grown tech rival, Huawei on multiple occasions. The U.S. market, there
were talks about 2019? The U.S. market actually is, I think in no doubt,
is the most important market, for everyone. We are still very, very young. The
U.S. market is very, very different. We are working very hard trying to design a product for
the U.S. market but still, resources is the big issue. Xiaomi made its name with the
smartphone, but it, like its competitors, is having to diversify as the
smartphone era’s peak winds down. Smartphone shipments have declined for
nine consecutive quarters here in China. So for Xiaomi to continue to grow, it sees its ambitions
beyond the smartphone and beyond China. Actually, we are much more
than a smartphone company. We are the largest consumer
IoT brand in the world. The company is putting much of its
energy into the home of the future. From smart rice cookers
to smart door locks, our homes are going high-tech and
Xiaomi wants to ride that wave. It says it has more than 190
million connected IoT devices. There’s five ways that I can
enter through this smart door. First is through my phone electronically
using something like NFC or bluetooth. And then there’s a number pad,
where I can input a number, there’s also a traditional keyhole here but I’m going
to be super unique and try my fingerprint. There we go. It’s also taking on Samsung and LG with
the launch of this smart refrigerator, which can catagorize your groceries,
play music and even take notes. Xiaomi hopes that every room will
have one of its AI Smart speakers, including the bedroom, so the moment I
walk in, the lights automatically turn on. Let’s see if she recognizes
me with an accent. I got her to recognize me and
she just said, “What’s up?” Earlier when I walked into
the room she told me, “Welcome back home, you
must be very tired, go to sleep.” She has quite a personality. The Mi AI Speaker is Xiaomi’s answer to
the Google Home or the Amazon Echo. While Xiaomi sold nearly three million smart
speakers in the second quarter of 2019, it still trails behind its Chinese
rivals Baidu and Alibaba. This store was open just about two years ago, but
one of the first things I noticed is just across from it, Xiaomi is preparing to open a brand-new
space but this one will be focused on lifestyle products and things
related to the smart home. While many of these products carry the Xiaomi
name, not all are actually made by Xiaomi. Take for instance, air purifier
company SmartMi. It’s one of the 270 startups
that Xiaomi invests in. Xiaomi helped SmartMi in significant ways
because we use Xiaomi channel to sell products. Its products are sold in Xiaomi stores
but also, through its own channels, too. SmartMi has grown to become China’s
number one selling air purifier. Consumers will know, “This product
is really good, its from Xiaomi. Oh, they also have their
own brand called SmartMi.” SmartMi even hopes
to one day go public. And just like Xiaomi, SmartMi is pushing
for success outside of China too. Right now 41,000 of your products are being
used in India, and you can track this in real time. Right. It’s startups like this that have helped
push Xiaomi’s international reach. How do you continue
the momentum? You have to keep the
innovating spirit. The smartphone market is very, very, very competitive.
You have to do a lot of exciting things everyday. Xiaomi turns 10 years old next year and in
under a decade it’s been able to do what many companies here in this country
haven’t done, succeed outside of China. But just how big this company can
get, well that’s anybody’s guess. Hey guys, it’s Uptin.
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