Two years after its high-quality, budget smartphone won over millions of Chinese fans, domestic tech firm Xiaomi Tech wants to make more money from online shopping and games than it does from selling its handsets.
Xiaomi is better known globally as China’s answer to Apple, an image that billionaire Lei Jun has fostered since he founded the company in 2010 by dressing in the black tops, jeans and sneakers favoured by the late Steve Jobs.
Lei has since expanded his wardrobe options and Xiaomi sold more smartphones than Apple in the second quarter in China, the world’s biggest smartphone market, according to the latest data from IT industry consultancy Canalys.
Xiaomi looks a bit like Apple but is really more like Amazon with some elements of Google
Xiaomi’s low prices, however, mean its profit margins are thin and that’s why Lei now wants to expand into China’s mobile internet business, estimated to be worth around US$30 billion by 2015 from roughly US$9 billion last year.
“Xiaomi looks a bit like Apple but is really more like Amazon with some elements of Google,” Lei said in an interview in Beijing, dressed in a blue shirt, blue jeans and brown shoes.
“The mobile phone is only the carrier,” Lei said. “Microsoft used to sell Windows in a box with a CD in it. Does that make Microsoft a paper box company?”
The popularity of Xiaomi’s cheap yet sleek handsets is indisputable: its flagship smartphone, the Mi 2S, was the most popular phone in China during the first half of the year, according to local benchmarking company Antutu.
Xiaomi’s latest smartphone, the Hongmi, sells for US$130, much lower than the US$770 price tag of the iPhone 5 or the US$470 for the latest Galaxy model by Samsung Electronics, the market leader in China.