We lower the barriers of entry to a connected world, and we change the world

If you had a smartphone, what would you do with it?  

Over the past few years, we’ve met many people who tell us how thankful they are that we lowered the threshold for owning a smartphone, allowing more individuals to enjoy the convenience of the Internet.

From day one, we’ve been committed to changing the world by creating inspirational products with accessible price points, empowering everyone in the world to enjoy a connected and smart lifestyle. And we’ve been committed to ensuring consumers and fans have trust in our brand products and services.

On 25 Apr we announced that as a promise to all our users, the company will forever limit the net margin after tax for its entire hardware business (including smartphones, IoT and lifestyle products) to a maximum of 5%.

We made this announcement at the launch of our latest smartphone Mi 6X, which truly exemplifies our philosophy of making products with “the same specifications, at half the price”. Featuring a 20MP front camera and a rear dual camera setup sporting 20MP and 12MP sensors, further supported by AI software, Mi 6X delivers exceptional portrait photos. It is also powered by Qualcomm Snapdragon 660. Even with these features typically only available in smartphones in the RMB 3,000 category, Mi 6X is available at RMB 1,599.    

In fact, our founder and CEO Lei Jun is taking the unprecedented step of incorporating this pledge into Xiaomi’s corporate mission statement.

Maintaining a low average net profit margin doesn’t mean we compromise quality for price. In fact, quality is the core of our value chain. We take craftsmanship very seriously, knowing that careful attention to detail makes all the difference.

In 2011 we announced our first smartphone – Mi 1, which is powered by Qualcomm Snapdragon S3, a cutting-edge dual-core processor at that time. This device has specifications you can find in the best smartphones in the global market, but at about half the price, RMB 1,999.

When creating Mi MIX in 2016, the revolutionary full screen display smartphone, we wanted to create a product unlike any other available at the time. Mi MIX incorporated leading-edge features such as removing the earpiece speaker, including the proximity sensor with piezoelectric ceramic technology and ultrasonic technology. The final price starting from RMB 3,499 yuan, shocked many people that such a revolutionary phone could be so affordable.

“From day one, Xiaomi has had a unique business model — and at the top of that model is our consumer to whom we have committed providing quality technology experiences accessible to the masses,” said Lei Jun. “We believe at our core that no one should be left behind when it comes to being connected to the world through technology.”

“We sell our smartphones and other hardware at affordable prices, but monetize our complementary services. If you use our browser, watch streaming video on our phones, or use our online services, we earn a profit,” Lei said.

In addition to our hardware, Xiaomi has a proven track record of developing killer apps including Mi Browser, Mi Video and Mi Music. This allows us to expand the relationship with our consumers in new ways and provide extended value over time. The connectivity between our devices and the seamless integration between hardware and Internet services enable us to deliver a top-of-the-line experience to our users.  

With Xiaomi devices, those who were left behind by the smartphone revolution are now able to live a more connected life by engaging in a myriad of activities only a smartphone can provide, including: using ride hailing apps, advertising their products on social media, chatting with family and friends and learning a foreign language through the convenience a smartphone affords.


Ahead of the Redmi 5A launch in Vietnam in this January, we interviewed several Vietnamese people who were left behind by the smartphone revolution. Here’s a video of this interview: 

 

[News] Xiaomi announces Mi 6X with 20MP front and back cameras for exceptional portrait photos

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Xiaomi’s hardware business will have an overall net profit margin that will never exceed 5%

To all Xiaomi employees:

Today is a historic day for Xiaomi. At the Mi 6X launch event in Wuhan earlier today, we promised our users that our hardware business, including smartphones, IoT and lifestyle products, will have an overall net profit margin that will never exceed 5%.

Why would we do this? Because we are Xiaomi.

1. A 5% limit on hardware net profit margin is necessary for our business model

Two days ago, Xiaomi’s Board of Directors approved my suggestion. Starting today, we officially promise our users that our hardware business, including smartphones, IoT and lifestyle products will have an overall after tax net profit margin that will not exceed 5% per year. If the margin crosses 5%, then we will find a way to return the excess above 5% to our users.

If we sell our products at close to cost and return value to our users, then we can earn the long-term support of our users. Aiming for large volumes with small profit margins will still result in suitable hardware profits for us in the long term.

In addition, we are different from traditional hardware companies. Xiaomi is an internet company with smartphones and smart hardware connected by an IoT platform at its core.

We have created a unique “triathlon” business model, encompassing hardware, internet service and new retail. We maintain excellent design and outstanding performance in our products, while keeping our products as close as possible to their cost price. In addition, we deliver products directly to users through highly efficient online and offline retail channels, including our self-operated channels, while providing them with comprehensive internet services.

In the past eight years, our business model has been challenged again and again. During the most difficult times, we have faced major obstacles. Xiaomi is the only smartphone in the world that has rebounded after a decline in sales. This miracle, coupled with the results we have achieved as of today, shows how relevant and advanced our model is.

In China, a single piece of clothing that costs 100 RMB can be sold for 1000 RMB in a shop, which is a shocking markup of 10X. A pair of shoes can be marked up by 5-10X, and a tie can be marked up by 20X. The list is endless.

It has always been difficult for me to understand why consumers have to bear the costs of this inefficiency. This is why Xiaomi has the will and determination to revolutionize the industry’s cost-efficiency. We do this by putting in every bit of effort to create quality products and maximize value to users.

Cost efficiency is at the heart of business competition, and a 5% limit on our overall hardware net profit margin is evidence of our high cost efficiency. This applies not only to smartphones. Previously, 10,000 mAh powerbanks were priced above 200 RMB, whereas our price point was 69 RMB. Mainstream air purifiers were priced at several thousand RMB, while we have managed to price our air purifiers within 1000 RMB. Across various product categories, we have successfully launched the best products and kept them close to their cost price, thus revolutionizing the entire industry and allowing these products to be available to the masses in a short span of time.

Today’s launch of Mi 6X is an excellent case in point. As a strategic product for our new retail channels, Mi 6X is equipped with the high-end Qualcomm Snapdragon 660 processor and the latest AI technology. Although products of similar performance, technology or even inferior configuration are priced at around 3000 RMB, we continue to stay close to our cost price, pricing it at 1699 RMB, which is almost half the price of our competitors.

 

2. Quality products with honest pricing are two inseparable concepts, and is the best way to repay users’ trust

In the past eight years, we have continually asked ourselves this question. Historically there have been many changes in the business, but what has remained constant?

Xiaomi’s answer is this: Users have always expected quality products at honest pricing.

“Quality products, honest pricing” is not just an empty saying, nor is it a statement to compliment ourselves. In order to truly execute this mission, we need sincerity and the determination to restrain greed.

Limiting our hardware net profit margin to 5% is our ever-lasting promise to our users and our goal for ourselves.

Quality products with honest pricing are two inseparable concepts. If the product quality is not high enough, users will not enjoy it no matter how low the price is. We need to ensure that we keep within the 5% limit on hardware net profit ratio while maintaining competitiveness at the same time. To do so, we need innovative technology and outstanding design, in order to launch products that exceed our users’ expectations. Simultaneously, we need to maintain honest pricing; only then will we able to touch the hearts of our users.

This belief is the foundation for our ceaseless motivation to explore and continually innovate. This belief is how we were able to launch one of the most innovative full screen technologies in the industry with ceramic technology. This is also the reason we have won over 200 globally acclaimed design awards.

In the past 8 years, I have had so many unforgettable moments at Xiaomi, including the first time we heard a ringtone from the first Xiaomi phone, the first time we received a gift from a Mi fan, and the first time we heard that a Xiaomi smartphone was being added to a museum collection. Among all these moments, nothing can surpass the feeling of hearing a user say that they can walk into a Mi Home, and buy any product with full confidence, because they are know that our products offer the best quality and price. When I hear this, I know that all our effort and energy have not gone to waste.

Why do our users trust us? It is because we relentlessly pursue innovation. In our users’ minds, we have established ourselves as a high-quality, well-designed and high value brand. They trust that as long as it is a Xiaomi product, it will have the best quality and price.

Xiaomi employees, our users’ trust is the best form of validation and our most valuable asset. We will not allow users to be harmed in the slightest. Our company can progress only by continuously winning our users’ trust.

3. Maintaining reasonable profits has historically been important for a company’s progress and is the only way for us to fulfill our mission

If we look at historical trends, whether in the automotive or PC industry, the great companies that have changed the world always make things lower in price and available to even more people.

Xiaomi is an engineering-led company. Engineers are constantly looking for the latest technologies to benefit the public and change the world.

Our mission is to relentlessly pursue great products with honest prices so that everyone can enjoy the benefits of technology.

In the past eight years, our high-performing and well-priced smartphones have raised the standards on performance and quality in the entire industry, contributing significantly to the rise of the mobile internet in China. We are now looking to extend this positive influence to the entire world.

Beyond smartphones, we have replicated our business model and strategy to over 100 Mi Ecosystem IoT and lifestyle product companies, which has accelerated the adoption of a smarter lifestyle and helped to build the world’s largest IoT smart home platform. We have created high-quality everyday products that are priced honestly, allowing more people to experience a better through technology.

We will live out Xiaomi’s mission by strictly following the 5% limit on our overall hardware net profit margin.

We have always firmly believed that the pursuit of product experience is more important than that of one-time hardware sales profits. Instead of adding on costs from various channels, we believe in providing quality products at honest prices.

Going forward, maintaining reasonable profits is an inevitable industrial trend.  Any move pushing for high gross margins will eventually reap no rewards.

Bearing in mind our values and legacy, we have set a hard limit of 5% hardware net profit margin. At present, the company has exceeded 100 billion RMB in annual revenue and has nearly 20,000 employees. In the future, Xiaomi may have higher revenue and become a larger organization. However, this hard limit will always remind every one of us of our ideals and our initial ambitions. As I mention ideals, today’s Mi 6X launch has a special meaning to me. This is because the launch event is at my alma mater, Wuhan University, which is where my dream started.

20 years ago, in my first year of university, I was in the library and read Fire in the Valley, a book that changed my life forever. After reading that book, my heart was not at peace for a long time, and I walked around the track at the sports field at Wuhan University multiple times. The fire within me was ignited, and from then on I was determined to create a great company and influence as many people as possible.

Going back to my alma mater today, I realized the fire within me is still burning as brightly as ever.

My fellow Xiaomi employees, eight years ago, we also ignited that fire within us, and that was just the beginning of Xiaomi. Today we have changed the lives of hundreds of millions, and in the future we will become a part of the lives of billions!

Lei Jun

Wuhan University 4.25.2018

From engagement to love: the Power of Xiaomi’s Global Mi Fan Force

When asked about the secret of Xiaomi’s success, the answer is largely our robust Mi Fan base. Our fans have shared their excitement, input and advice from day one and help create a unique Xiaomi culture that spans the globe.

Li Wanqiang, our co-founder who leads Xiaomi’s marketing team, shared insight into Xiaomi’s Mi Fans and culture in his bestselling book, Sense of Engagement.

In the book’s foreword, Xiaomi Founder and CEO Lei Jun writes, “Four years ago, when I was creating Xiaomi, my idea was that no matter how big this company becomes in the future, we must run it like a small restaurant, a company where users can take part.”

And take part, they do! Our Mi Fans show up in full force for events around the world.

Mi Fan registration and experiential area at Mi A1 launch in India, September 2017

Enthusiastic Mi Fans at the opening of the first Authorized Mi Store in Barcelona

Befriending users and letting them take part in Xiaomi’s future has been at the core of our company from the beginning. As Li Wanqiang points out, friendship provides the strongest trust. We are not only selling products but delivering a sense of community.

We welcome users to participate in our product development and advancement. In fact, Xiaomi users improved the MIUI system and with many foreign users taking part, Mi Fans launched English, Spanish and Portuguese MIUI versions on their own.

Alex García Iskenderun, loyal Mi Fan, has been highly engaged in MIUI’s development and enhancement since he was first introduced to Xiaomi eight years ago and shared, “I fell in love with MIUI at first sight. I have always been a very creative person and wanted to do my bit to change the world. MIUI allowed me to use my creativity.”

Alex built a website dedicated to the Spanish version of MIUI, bringing like-minded people together in one place. As a result, on January 11, 2011, miui.es was born.

In 2011, Alex became one of 100 MIUI beta testers before the first Xiaomi smartphone, Mi 1 was announced.

“Mi 1 was my first Xiaomi device, which I still have,” he recalled. “If you open the back cover you can see it has the number 35. If I remember correctly, only 100 numbered units were made.”

Alex still keeps his Mi 1

Now Alex has joined us as senior manager of the Mi Community in Spain.

The best part of Xiaomi is its ability to let fans be part of their family and listen to them. I had no regulated studies, no experience in a technology company… but for Xiaomi, that is not a problem. They understand that I have something to contribute and I want to contribute,” he said.

Sometimes Mi Fans find even more than they hope for at our events. This happened to Indonesian Mi Fan Fajar Yogas who found his “other half,” Dea, at a Mi Fan roadshow in Surabaya in May 2016. The newly-wed couple was cheered by other Mi Fans when they were invited to the stage during the Redmi Note 5A launch in Indonesia last December.

Fajar and Dea meet at a Xiaomi event

The newly-wed couple was cheered by other Mi Fans when they were invited to the stage during the Redmi Note 5A launch in Indonesia last December.

Appreciation for our Mi Fans comes from the very top. Every year on our birthday, April 6, Lei Jun thanks Mi Fans in a social media post because – as we at Xiaomi all know – Mi Fans are the reason Xiaomi is where it is today.

MIUI 9.5 OFFERS FULL SCREEN GESTURES: A NEW WAY TO CONTROL YOUR XIAOMI DEVICE

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[News] Xiaomi Advances Indian Localization Strategy with Opening of New PCBA and Smartphone Plants

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