Corporate China
PUBLISHED : Monday, 18 November, 2013, 2:06pm
UPDATED : Monday, 18 November, 2013, 2:11pm

Weibo: Xiaomi draws kudos from high tech execs

BIO

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young’s China Business Blog (www.youngchinabiz.com), commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.”
 

Charismatic Xiaomi co-founder Lei Jun has had huge success getting China's gossipy media to promote his company, and now he's succeeding in getting many of the country's other high-tech leaders to talk about his firm and its trendy smartphones. In the last week alone, Xiaomi's name has cropped up several times in connection with other Internet and tech executives on Sina (Nasdaq: SINA) Weibo, often called the Twitter (NYSE: TWTR) of China.

Lei himself and several of his lieutenants were tweeting nonstop during his company's high profile promotion on Alibaba's e-commerce platforms during the Nov 11 Singles' Day shopping extravaganza, though that's nothing unusual. But others who joined in with their own comments included executives from leading Internet company Tencent (0700.HK), and also from stodgier smartphone rival Huawei, which looks just slightly envious of Xiaomi's trendy image.

Lei wasn't the only one from Xiaomi tweeting away during the Singles' Day holiday, which is fast becoming China's busiest shopping day of the year. Other company executives who tweeted during that time included Lin Bin, another of Xiaomi's co-founders, and Wei Lai of Xiaomi's marketing department. The most interesting of the posts comes from Lei himself, in which he defends his company to skeptical observers who sometimes doubt his tactics and sales figures.

Xiaomi said it sold more than 500 million yuan (HK$632 million) worth of phones during its Singles' Day promotion with Alibaba, which would equate to around 200,000 phones if one assumes an average price of around 2,500 yuan. That led some to question how Xiaomi was able to offer so many phones when it often runs out of merchandise during its other promotions that are much smaller. Many believe that Xiaomi engages in "hunger marketing", the practice of manipulating supply to create constant product shortages and consumer buzz.

In one of his Weibo posts, Lei implicitly acknowledges that many are suspicious of the sales figures his company regularly gives out. But he points out that in the case of Singles' Day, Alibaba acts as a more neutral third-party by formally posting the volume of sales on its e-commerce platforms. "This should give everyone more confidence in Xiaomi's monthly sales figures," Lei tweeted in the post. Of course, Alibaba itself is also a master of hype, providing huge media access to its e-commerce business on Singles' Day so reporters could watch how quickly its sales rang up.

Personally speaking, I would be skeptical not only of Xiaomi's figures but also sales figures from any other Chinese tech start-up, and even many older listed companies. Such firms are masters at inflating their numbers to look impressive, and such practices certainly aren't confined to China. All that said, however, I do have to compliment Lei and Xiaomi on their ability to create such a "cool" image for their product, which is fast becoming a sort of status symbol for hip and trendy youngsters.

Tencent's founder Pony Ma was one executive who had praise for Xiaomi's rapid success, according to another post by Xiaomi's own marketing executive Wei Lai, who I already mentioned above. Wei cites a recent Shenzhen media report saying that Pony Ma's most admired tech companies include Xiaomi, as well as clothing seller Vipshop (NYSE: VIPS), newly listed online classified ad firm 58.com (NYSE: WUBA) and the 3C business of e-commerce firm Jingdong.

Last but not least, Xiaomi was also on the mind of Huawei senior vice president Yu Chengdong, who posted a series of comments hinting at a certain envy towards his company's smaller but trendier rival. Huawei has also been pushing hard into the smartphone space, and recently took over the spot as the world's third biggest seller. But despite its efforts, Huawei's image is still one of a stodgier, big corporation that specializes in cheap smartphones.

In his postings, Yu laments the fact that his company still relies largely on traditional channels for its sales. He says that contrasts sharply with Xiaomi, which relies almost exclusively on online channels that appeal to younger users and have helped it to build its trendier image. "What's there to celebrate?" he asks, in reference to Huawei's recent claiming of the spot as the world's third largest smartphone maker. Perhaps that hints at some new and more online-focused marketing campaigns coming up for Huawei, as it tries to change its image to a younger, more consumer-friendly brand.

To read more commentaries from Doug Young, visit youngchinabiz.com

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