Xiaomi launches see-through Mi 8 flagship smartphone ahead of blockbuster IPO

Xiaomi, the world’s fourth largest smartphone supplier, unveiled in Shenzhen on Thursday a new flagship handset with a see-through back in its biggest product launch to date, weeks before the company’s much-anticipated initial public offering in Hong Kong.

The Mi 8 Explorer Edition features a transparent glass back panel that shows off its camera module, chip set, battery and connectors, which evokes the design for see-through watch movement in some luxury mechanical timepieces.

Along with apparent design cues from iPhone X, the limited-edition Xiaomi smartphone also comes with an in-display fingerprint reader and so-called 3D face unlock technology, which is like the Android version of Apple’s Face ID function on its latest mobile phones.

At the Shenzhen launch that had an audience of more than 7,000 people, Xiaomi chairman and chief executive Lei Jun also introduced the company’s regular Mi 8 smartphone series, the Mi Band 3 fitness tracker, a smart television with light-emitting diode screen and the MiUI 10, the updated version of the firm’s Android-based operating system, which serves as the gateway to its various internet services.

“Pursuing innovative technology and outstanding design is in our DNA … as we set out to win the hearts of our users,” said Lei, who founded Xiaomi in 2010.

The new product launch followed the Chinese company’s move to start sales in France and Italy last week, extending its reach into western Europe which has seen a slowdown in smartphone shipments this year.

The company is now putting the finishing touches on a plan to make its US$10 billion IPO available to investors by early-to-mid July, presenting the biggest global stock offer this year as a birthday present of sorts to Hong Kong’s stock market, which marks the 21st anniversary of the city’s return to Chinese sovereignty on July 1.

Chinese smartphone giant Xiaomi’s Hong Kong IPO will launch in July

It also comes ahead of Xiaomi’s much-speculated public listing in Hong Kong.

Senior executives will go on a roadshow by the end of June to persuade institutional investors in the United States and Europe to value its business at no less than US$70 billion, according to a person familiar with Xiaomi’s plans.

The valuation of Xiaomi’s business, which went from a start-up to surpass 100 billion yuan (US$16 billion) in seven years, is based on the projection that its annual profit growth will top 50 per cent in the next three years through 2020, the person said.

A US$10 billion IPO, the biggest in the global pipeline for 2018, would hurtle Hong Kong to the pole position in the race to be the destination of choice for global companies seeking to raise capital. Hong Kong fell to fourth position in the worldwide IPO stakes last year, overtaken by Shanghai and Shenzhen for the first time.

“As we mark our eighth year and all the significant milestones we have achieved on this journey so far, we are preparing for a future that is about Xiaomi’s continued commitment to relentlessly pursue innovation, and our dedication to delivering amazing products at honest pricing,” Lei said.

The so-called Xiaomi business model is built on the idea that profit can be made from internet services delivered to its customer base of connected devices. That allows Xiaomi to make less from its hardware products, which in turn helps to build a reputation for providing value-for-money to consumers.

Xiaomi’s board passed a resolution in April to cap the firm’s net profit margin on its hardware business at five per cent starting this year and to distribute any excess amount “by reasonable means” to its users.

The company offers more than 300 different products, from smartphones to power banks and smart weighing machines, often co-branded with the more than 100 partners its has invested in.

For its latest smartphones, Xiaomi announced that prices for its Mi 8 Explorer Edition start at 3,699 yuan, while the regular Mi 8 series is at 2,699 yuan.

Those prices make the devices competitive with the iPhone X, which is priced from 8,316 yuan on the mainland.

In an interview in March, Lei said the iPhone was not cost-effective compared with Xiaomi’s handsets. He described iPhone users as stupid because they were paying “intelligence quotient taxes”.

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The lower pricing may augur well for Xiaomi’s international expansion, which includes operations in about 74 countries. The company is already the biggest smartphone supplier in India, with about a 30 per cent share of the market; the second largest in Indonesia; and No 3 brand in Spain, according to estimates from research firm Canalys.

Xiaomi’s latest product launch may also help win the hearts of investors in its industry, according to Counterpoint analyst James Yan.

“Xiaomi is one of the leading companies in the smartphone industry,” Yan said. “So when Xiaomi uses these new technologies, like 3D face unlock, investor confidence in related manufacturers could also receive a boost.”

A Xiaomi fan who viewed the Shenzhen launch online, 25-year-old Xu Shian, said he was not only bullish about the company’s products, but also its IPO. Xu said he was keen to buy around 10,000 yuan worth of shares when Xiaomi starts trading in Hong Kong.

China’s Xiaomi expands into France and Italy, bucking slow smartphone growth in region

Still, other people who attended Xiaomi’s launch in Shenzhen were not as optimistic about the direction the company’s smartphone line is headed.

That was expressed by the silent reception the new Mi 8 smartphone series received when Lei showed off its screen, which also had a notch on top like the iPhone X.

“I’m a little bit disappointed at the moment because I thought Xiaomi would do something different other than copying the iPhone,” said a 23-year-old Xiaomi fan surnamed Zhai.

“But I understand that the notch screen is not only a design choice, but also a technical solution for full-screen mobile phones,” Zhai said.

The other Xiaomi fan, Xu, said he was not disappointed at all. “All I can say is that Apple is still the industry leader, and the notch screen will be trendy for a while.”