Mi mi mi: su­per fans of China’s Xiaomi stoke IPO am­bi­tions

Business World - - CORPORATE NEWS -

BEI­JING/SHANG­HAI — Wang Bin, 29, is a se­ri­ous “mi fan,” one of the ar­dent fol­low­ers of Xiaomi Tech­nol­ogy Co. Ltd., the maker of smart­phones and other elec­tronic prod­ucts that looks headed for a big ini­tial pub­lic of­fer­ing, per­haps as early as this year.

Wang’s house is a Xiaomi tem­ple. He has a Xiaomi tele­vi­sion. Wears a Xiaomi watch. Has Xiaomi ther­mostats, air pu­ri­fiers and smoke de­tec­tors. Xiaomi prod­ucts help con­trol the win­dows, doors and lights from an app on his Xiaomi smart­phone.

The com­pany, which started with smart­phones but has since branched out into a plethora of smart de­vices, first gained a fol­low­ing in China by re­leas­ing lim­ited batches of slick­look­ing phones to shop­pers on­line at a lower price tag than the likes of Ap­ple, Inc.

“Or­di­nary peo­ple can now ex­pe­ri­ence things that were out of reach be­fore, and this value has helped get these prod­ucts into mil­lions of fam­ily homes,” said Wang. “Since the first Xiaomi smart­phone came out I knew Xiaomi would change the world.”

Wang needs no win­ning over. Still, Xiaomi — led by en­tre­pre­neur Lei Jun — will need many more loyal fans to live up to sky-high in­vestor ex­pec­ta­tions.

There are con­cerns over thin mar­gins, a stalling Chi­nese smart­phone mar­ket, costs of open­ing phys­i­cal stores, and ob­sta­cles fac­ing the brand to re­tain its fol­low­ers and win new ones over­seas, an­a­lysts who cover the com­pany told Reuters.

HIT A WALL

Reuters re­ported last month that Xiaomi had tapped CLSA, Goldman Sachs and Mor­gan Stan­ley as spon­sors for its pro­posed IPO, which could value the com­pany at up to $100 bil­lion and be the world’s big­gest tech float this year.

“Look­ing from the out­side in, that $100-bil­lion num­ber sounds fea­si­ble, you can do the math and say it’s pos­si­ble,” said Hans Tung, a man­ag­ing part­ner at GGV Cap­i­tal, who was an early in­vestor in Xiaomi and is a for­mer board mem­ber.

A lot will de­pend on the ma­jor strat­egy shift Xiaomi is driv­ing with its “In­ter­net of things” smart prod­ucts and ser­vices as well as its open­ing of phys­i­cal stores. It’s also push­ing hard in key mar­kets like In­dia and South­east Asia.

Xiaomi, founded in 2010, started with an on­line- only strat­egy that helped it be­come, if briefly, the world’s most valu­able start- up. CEO Lei Jun de­vel­oped a cult sta­tus akin to the late Ap­ple founder Steve Jobs.

But its on­line model even­tu­ally hit a wall. Xiaomi’s phones dropped out of the top five in China in 2016 be­cause of ris­ing com­pe­ti­tion from lo­cal ri­vals Huawei, Oppo and Vivo.

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