In 2018 Xiaomi became the fourth largest smartphone company
in the world. Its unique business model, which includes capping its
profit on hardware, is driven by their brand’s democratising mission
to offer ‘amazing products at honest prices’. As Chief Executive
Officer Lei Jun put it in the company’s IPO statement the same year:
‘We want to allow everyone, regardless of gender, ethnicity, religion,
nationality or education level, to enjoy the benefits of technology.’

Global expansion has been key: 10 years old, Xiaomi’s international
business accounted for almost half of its total revenue in 2018,
growing at 113%, year on year. Newly launched in the UK and Ireland,
we spoke to UK Sales and Marketing Director Wilkin Lee two months
after the opening of the first dedicated Mi store in London.

Can you tell us about Xiaomi and the ambition for the UK?
I’ve just joined Xiaomi as of August 2018, so I’m quite new to the
company, but it has been a very exciting time – we only launched
in the UK in November 2018.

The Xiaomi brand itself started in 2010, so in terms of a tech brand
we’re actually quite new, but the growth we’ve had has been
phenomenal. For instance, within the first two years we achieved
US$1bn in sales, and then in just four years alone we achieved
US$10bn in sales.

As a smartphone brand we’re the fourth largest in the world, but we’re
not just a smartphone manufacturer, we are an internet company –
and, more precisely, an internet company with smartphones and
smart hardware connected by an IoT platform at its core. With that
we’re bringing innovation in both hardware and internet services.
We have established the world’s largest consumer IoT platform
with more than 132 million connected smart devices (excluding
smartphones and laptops), so there’s a lot more to us than
just smartphones.

For the UK launch, at the moment we’ve got products across
categories such as health, with our smart watches, fitness trackers
and smart scales. For the home we’ve got smart lightbulbs, LED
lighting, routers, bags, and glasses. So, we’ve got a very broad
portfolio in terms of the hardware and different consumer lifestyle
products that we bring to the market.

Europe is a key priority for us in our global expansion, and the UK
plays a pivotal role in this journey. One of our biggest obstacles when
entering the UK and Ireland markets is brand awareness – in the UK
and Ireland we are a relatively unknown brand. So my ambition for
the UK is really to make fans and friends first – it’s really just driving
awareness through great products, great pricing, great PR and
media reviews of our devices.

How is Xiaomi democratising technology for consumers?
For Xiaomi one of the key factors that makes us special is the fact that
we’re tying up innovation for everyone along with honest pricing.

For us, innovation for everyone is about how high we can go in terms
of a product. But with the honest pricing side of our brand it’s about
how far we can go – so that the consumer is paying an affordable price
for a device with all the quality, innovation, materials and components
that they would expect from a far higher cost price device out there.
For instance, the fact that we’re selling the Mi MIX 3 at £499 doesn’t
mean you’re getting half the phone compared to a phone that’s
priced at £1,000.

As a company, we’ve capped our hardware to an average of 5% net
profit, which is why we can afford to deliver this level of product for
the price. Honest pricing is in our company statute, so that even if
the current CEO moves away, the next CEO has to adopt the 5%
net profit promise.

For us, honest pricing makes our hardware more accessible, and
we can do that because we’re not just a smartphone manufacturer.
As an internet company – and this is how the internet business
is run – our focus is on generating revenue and sales via services
rather than products.

How does Xiaomi ‘democratise’ innovation by working with other
companies in the Xiaomi ecosystem?
We’ve got 132 million activated smart home devices as of Q3 2018,
which is a showcase of how good our platform is. Even now it’s all
activated via our Mi Home app, which works on both iOS and Android.

Globally we’re partnering with businesses and developers to create
a genuine ecosystem of smart products. The Xiaomi IoT Developer
Program was first launched in 2017, giving third-party developers access to the Mi Home platform for controlling smart home scenarios
with cloud, AI and big data capabilities. This year we’re building the
‘Xiaomi AIoT Developer Fund’, which will be used to support
AI developers, hardware equipment manufacturers and AI
technology companies.

How does Xiaomi engage with its customers?
Xiaomi has a big, strong group of customers, which we call the
Mi Fan base. For us, our Mi Fans are the core of why we do things,
and also how we do things.

We engage with them on social media, whether that’s Facebook,
Instagram, or Twitter, but then also we’ve got the MIUI fan forum as
well – this is where we’re interacting with our more tech-savvy fanbase.
On the forum they can ask questions, they can actually talk to us
directly, make suggestions – and those are suggestions that we can
implement into our future devices. For instance, this week we’re
launching our Mi MIX 3, which is our latest flagship smartphone. With
that, and the original and the second versions of our Mi MIX device,
we took a lot of our fans’ input to then develop it into the product itself.

The company taps into its fan base to support the business. For
example, Xiaomi asks users to suggest new features, and then lets
them vote each week on which to incorporate into the operating
system. Every Friday at 5pm (Beijing time), Xiaomi issues an
update to the MIUI that includes the most popular new features.

How does the Mi fandom affect the culture internally?
A lot of the employees at Xiaomi have previously been fans. For
instance, our current community manager, who handles engagement
on our forum with the Mi Fan base, had previously been following us
for about six years. He’s one of the early adopters of Xiaomi in the UK,
even before joining he was one of the users of a Xiaomi smartphone.

I think a lot of people buy products and then don’t really get to interact
with the brand, whereas for Xiaomi we’re very different. We love it
when fans talk to us and just tell us what they’re doing or not doing
with the products.

As a culture and brand we love to do it ourselves – so in terms of the
community forum, a lot of our engineers are actually there, directly
talking to our fans. This is where we learn from them how they’re using
devices, what they want to see in the devices and software, and then
implementing that.

How has the launch in the UK been so far?
Even before we launched in the UK I was talking to fans who had over
10 Xiaomi devices at home. On the day we opened the Authorised
Mi store at Westfield in London, it was extraordinary. We had three
international fans who had actually slept overnight outside the store.
We had a fan from France, one from Germany, and I believe one was
from Colombia, and they had planned to come to the UK for that
weekend specifically for the store opening. In terms of engagement
on the day, the store has a capacity of about 100 people. Throughout
the day we had a queue of between 300 and 400 people waiting to
get in at any one time.

That’s where we’re driving word of mouth and awareness – knowing
someone who is already using a Xiaomi device, and learning about
the great experience that they’re having with the technology – I think
that’s where the growth and the opportunity really is. We have already
changed how hundreds of millions of people live around the world,
and we hope to become a part of the lives of billions of people in
the future.