Xiaomi, ‘China’s Apple’, makes debut in Spain at world’s biggest mobile show ahead of IPO
In first appearance at Barcelona event, all eyes on the ‘Apple of China’ as it gears up for listing after solid performance last year
Xiaomi, at times referred to as the “Apple of China”, made its debut in Barcelona this week at the mobile industry’s most important event ahead of a widely anticipated IPO set for later in the year.
While the Beijing-based company hosted a smartphone launch two years on the sidelines of the Mobile World Congress (MWC), this year marks its first appearance as an official exhibitor at the world’s largest gathering for the mobile industry. Xiaomi also opened its first Mi store in Barcelona over the weekend, its third in Spain, as it sought to raise its profile internationally.
“Even though Xiaomi is not releasing any new phones at MWC, it’s a good opportunity to show the world the range of products they have,” said IDC’s senior market analyst Tay Xiaohan. “Consumers outside China may not be as familiar with Xiaomi’s existing ecosystem and the range or products that they have.”
Projecting a more international image will help Xiaomi attract more global investors for its planned share sale. While the company said it does not comment on listing plans, the Beijing-based company has appointed investment banks to work on its IPO on the Hong Kong stock exchange, according to a person with knowledge of the matter. Market speculation that Xiaomi would seek a listing intensified after the company staged a dramatic turnaround following a lacklustre performance in the prior year.
“Xiaomi’s global sales were solid in 2017, and its performance in China was also good,” Xiaomi’s founder and CEO Lei Jun said on his official Sina Weibo account on February 22, citing data from IDC that showed its Chinese shipments surged 57.6 per cent in the fourth quarter last year despite the country’s 15.7 per cent slump in smartphone shipments.
“As long as Xiaomi continues to produce good products that touch the hearts of consumers and are priced reasonably, it will surely win the hearts of Xiaomi fans and will return to the top sales spot in China,” he said.
Xiaomi’s booth at MWC is about 100 square metres in size, bigger than most start-ups but much smaller than tech giants like Samsung and Huawei. The company is showcasing a range of its products, including smartphones, electronic gadgets like earphones and robots, as well as smart TVs. There is also an area for the visitors to try out its electric scooters.
Established in 2010, Xiaomi at one time was the world’s most valuable private start-up, worth more than US$46 billion at the end of 2014. But the rise of other Chinese smartphone brands, including Huawei Technologies, Oppo and Vivo, redefined the smartphone market in China, with vendors offering reasonably priced, high-quality devices promoted by local celebrities. As a result the Xiaomi user base of younger people who favoured cost-effective products was eroded as many of them switched brands.
Xiaomi lost its sales crown and fell to the fifth place in China in 2016, with its market share also halving to 8.9 per cent from the prior year, according to IDC.
However, the comeback came in the fourth quarter of 2017 when Xiaomi’s annual shipments shot up almost 58 per cent at the expense of Oppo and Vivo, according to IDC data released in February. Amid last year’s unprecedented decline in smartphone shipments in China, Xiaomi bucked the trend by posting the strongest gains among major vendors. Globally, Xiaomi’s shipments surged 74.5 per cent for all of last year.
“2017 has been an extraordinary year for Xiaomi. It was a turnaround year, but more importantly a leapfrog year – a critical year in breaking new ground for our future as we embark on a new journey,” Lei said to employees during a year-end gala in February. At the time, he also set the ambitious goal of retaking the top spot in the domestic market within 10 quarters.
Jupiter Zheng, vice-president of research with Zhongtai International Securities, said it is still unclear whether Xiaomi plans to list its entire business or just certain segments like smartphones.
Xiaomi already sells about 200 products in China, ranging from smartphones to home appliances.
Huami Corp, the smart wearable device maker backed by Xiaomi, raised US$110 million after it listed on the New York Stock Exchange in February.
“It is good timing for Xiaomi to list the smartphone business as it has just achieved an impressive rebound,” said Zheng. “Despite the Chinese smartphone market slowing down, Southeast Asian countries are still a fast growth engine and Xiaomi has already mapped out its businesses there.”
In India, the world’s second largest smartphone market, Xiaomi shipped 8.2 million smartphones during the fourth quarter of 2017, giving it a 27 per cent market share and vaulting it to No 1, according to research firm Canalys. The effort ended the six-year reign of South Korean rival Samsung Electronics.
Xiaomi, which entered the Indian smartphone market in July 2014, now holds a 27 per cent share, according to data from research agency Canalys.
Lei also identified the Indian market, which Xiaomi entered in July 2014, as a top priority as it seeks to replicate its mainland Chinese success in reaching consumers obsessed with cost-effective electronic gadgets.
During Lunar New Year in mid-February, Xiaomi opened its first offline Mi store in the Philippines as part of an overall strategy to boost international sales ahead of its much-anticipated public share offering.
“We are present in 70 countries and regions so far globally and became top five in 16 markets. India is an extraordinary example,” Lei said during the year-end gala.
“Also, with Indonesia representing Southeast Asia, Russia representing Eastern Europe, and Spain representing western Europe, all our markets have shown strong growth,” Lei said.